FRANK CERTO and MURIEL CERTO, Appellants,
v.
THE BANK OF NEW YORK MELLON, f/k/a The Bank of New York, Successor in Interest to JPMorgan Chase Bank, N.A., as Trustee for Structured Asset Mortgage Investments II, Inc., Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates, Series 2005-7, Appellee.

No. 1D17-4421.District Court of Appeal of Florida, First District.April 3, 2019.On appeal from the Circuit Court for Clay County, Don H. Lester, Judge.

Frank Certo and Muriel Certo, pro se, Appellants.

Michael T. Gelety and Shawn L. Taylor, Deluca Law Group, PLLC, Fort Lauderdale, for Appellee.

PER CURIAM.

Appellants challenge a final foreclosure judgment entered against them. Because we find Bank of New York Mellon failed to prove its standing, we must reverse.

Facts

American Landmark Mortgage lent Appellants monies secured by a Mortgage in favor of American Landmark as lender and MERS as nominee. American Landmark specially indorsed the Note to CTX. CTX specially indorsed the Note to JP Morgan Chase as trustee. Bank of New York Mellon brought suit to foreclose on the Mortgage, and included a count to reestablish a lost note.

Appellants challenged Mellon’s standing. Mellon claimed standing through a 2011 assignment of mortgage from American Landmark to Mellon. It also pointed to the case style: Bank of New York was successor in interest to JP Morgan (which had a special indorsement), and Mellon was the new Bank of New York. At trial, Mellon entered a copy of the Note, three assignments of mortgage, two change in servicer letters, a power of attorney, a Pooling & Servicing Agreement, and payment history.

Law

In a foreclosure action, once a defendant challenges standing, the prosecuting bank must adduce evidence that it has standing to bring suit. Ham v. Nationstar Mortg., LLC, 164 So. 3d 714, 719 n.1 (Fla. 1st DCA 2015). A bank also has the burden of proving a lost note claim. See Poag v. Nationstar Mortg., LLC, 198 So. 3d 1002, 1004-05 (Fla. 1st DCA 2016) (explaining that a lost note count requires the plaintiff to prove it was entitled to enforce the instrument; i.e., had/has standing); see also § 673.3091(1)(a), (2), Fla. Stat.; Peters v. Bank of N.Y. Mellon,227 So. 3d 175, 177-80 (Fla. 2d DCA 2017) (reversing where trial court granted reestablishment of lost note and appellate court found plaintiff bank could not evidence effective transfer of note and therefore lacked standing).

If a note is specially indorsed to an entity other than the plaintiff, the plaintiff can show its standing through evidence that it purchased the debt or obtained it via effective transfer or valid assignment. Bank of N.Y. Mellon Trust Co., N.A. v. Conley, 188 So. 3d 884, 885 (Fla. 4th DCA 2016); Stone v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013). This evidence need not be documentary; witness testimony is sufficient. See Ham v. Nationstar Mortg., LLC, 164 So. 3d 714, 719 (Fla. 1st DCA 2015). That testimony, however, must evidence the transfer or sale of the particular mortgage or show the relationship between the specially indorsed entity and the suing plaintiff. Green v. Green Tree Servicing, LLC, 230 So. 3d 989, 991 (Fla. 5th DCA 2017) (quoting Vogel v. Wells Fargo Bank, N.A., 192 So. 3d 714, 716 (Fla. 4th DCA 2016)). For example, a bank employee’s testimony about the purchase assumption agreement by which the new entity acquired all the assets of the old bank was competent, substantial evidence of standing. Stone v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013).

On the other hand, it is insufficient for the plaintiff to rely on its acquisition of the other entity. See Fielding v. PNC Bank Nat’l Ass’n, 239 So. 3d 140, 142-43 (Fla. 5th DCA 2018); Kyser v. Bank of Am., N.A., 186 So. 3d 58, 61 (Fla. 1st DCA 2016)(despite testimony of merger, witness gave no testimony as to what assets exactly were acquired); Fiorito v. JP Morgan Chase Bank, Nat’l Ass’n, 174 So. 3d 519, 520-21 (Fla. 4th DCA 2015) (testimony one entity “took over” another is not sufficient); Lamb v. Nationstar Mortg., LLC, 174 So. 3d 1039, 1041 (Fla. 4th DCA 2015) (listing cases). Similarly, listing party status as “successor by merger” or claiming a title is not sufficient; a plaintiff must support its claim by evidence. See Buckingham v. Bank of Am., N.A., 230 So. 3d 923, 924-25 (Fla. 2d DCA 2017)(holding words “successor by merger” were insufficient to “establish the merger, let alone that the [plaintiff] acquired all of [the successor’s] assets”); DiGiovanni v. Deutsche Bank Nat’l Trust Co., 226 So. 3d 984, 988-89 (Fla. 2d DCA 2017)(finding no standing where Deutsche presented no evidence “Bankers Trust had been renamed Deutsche Bank”); Murray v. HSBC Bank USA, 157 So. 3d 355, 358-59 (Fla. 4th DCA 2015) (explaining “Option One California” was not “Option One Mortgage Corporation”); Verizzo v. Bank of N.Y., 28 So. 3d 976, 977, 978 (Fla. 2d DCA 2010) (explaining plaintiff listing itself as “successor trustee” was insufficient).

Application

We find Conley instructive. There, Mellon argued it had standing, claiming it was the former Bank of NY, which was successor in interest to JP Morgan, which had a special indorsement on the note. 188 So. 3d at 885. Mellon even introduced a purchase agreement where JP Morgan Co. sold assets to Bank of NY. Id. The court rejected Mellon’s standing claim. Id. First, JP Morgan Bank was listed on the special indorsement, but JP Morgan Co. was on the asset purchase agreement. Id. at 885-86. Second, even putting that aside, Mellon was still out of the loop; at best, JP Morgan sold its interest to Bank of NY, but there was no evidence connecting Mellon. Id. at 886.

The trouble here, similar to the trouble in Conley, is Mellon’s link to Bank of NY and Bank of NY’s link to JP Morgan. Because the final special indorsement is to JP Morgan, Mellon needed to evidence how it obtained the Note or interest. It claims to have it because Bank of NY is a successor to JP Morgan and Mellon is the new Bank of NY. However, the record does not establish either of those necessary links.

Mellon relies on the Note, three assignments of mortgage, two change in servicer letters, a power of attorney, a Pooling & Servicing Agreement, and payment history. None of these proves standing. To begin, the Note indorsement to JP Morgan is insufficient because it does not close the gap between JP Morgan and Mellon. Nothing shows how or to what extent Bank of NY acquired assets of JP Morgan; i.e., that Bank of NY was a successor in interest of any or all of JP Morgan’s assets. See Buckingham, 230 So. 3d at 924-25 (holding words “successor by merger” were insufficient to “establish the merger, let alone that the [plaintiff] acquired all of [the successor’s] assets”); Conley, 188 So. 3d at 885-86(explaining BONY Mellon had submitted a purchase and assumption agreement attempting to evidence sale of JP Morgan assets). Similarly, even if that was evidenced, nothing shows Mellon is formerly Bank of NY. See DiGiovanni, 226 So. 3d at 988-89 (finding no standing where Deutsche presented no evidence “Bankers Trust had been renamed Deutsche Bank”); Murray, 157 So. 3d at 358-59 (Fla. 4th DCA 2015) (explaining Option One California was not Option One Mortgage Corporation). The record does not contain a merger or purchase agreement. There is no witness testimony about a merger or purchase.^[*]

Next, the remaining documents do not evidence Mellon’s purchase, transfer, or assignment. First, the corporate assignments of mortgage are insufficient. The 2007 assignment is to Bank of New York. The 2011 assignment is from the original lender—which had indorsed the Note to CTX. It is unclear how the original lender could specially indorse the Note to CTX yet still have an interest to convey to Mellon. Second, the change in servicer letters reflect only that a new servicing company was servicing the Note. The letters say nothing about the underlying debt and Note being sold to a new bank. In addition, the change in servicer letters are dated May 2016; they cannot show who owned the Note when the action was filed in January 2015. Third, the limited power of attorney merely grants a servicer the ability to act; it does not evidence a debt or transfer of a debt. Again, it is dated March 2017 and similarly cannot show who owned the Note at the 2015 filing. Fourth, the payment history does not specifically list Mellon. Finally, the PSA is between Structured Asset Mortgage Investments, JP Morgan, Wells Fargo, and EMC. Mellon is not a party. An agreement to which Mellon is not a party does not evidence a transfer of the Note to Mellon. Thus, the documents Mellon introduced below and that it cites on appeal do not evidence its purchase of the debt or an effective transfer or valid assignment to it.

Conclusion

Mellon needed to show the pieces in this Note puzzle ended with it. It is missing evidence of two pieces: that Bank of NY was successor in interest to JP Morgan, and that Mellon is formerly Bank of NY. Accordingly, Mellon did not evidence its standing to foreclose. We must reverse the final judgment of foreclosure. See Nationstar Mortg., LLC v. Brown, 175 So. 3d 833, 834-35 (Fla. 1st DCA 2015)(noting that dismissal of foreclosure action does not preclude subsequent action based on later or ongoing defaults). Because of this disposition, Appellants’ second issue is moot and we decline to comment on it.

REVERSED.

ROBERTS, RAY, and KELSEY, JJ., concur.

Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331.

[*] There is no trial transcript in the record, but Mellon does not suggest there was testimony that evidenced its standing; i.e., Bank of NY’s apparent purchase of JP Morgan’s interest and Bank of NY’s apparent renaming to Mellon.

 

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SAMANTHA ROUSSELL, Appellant,
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 TRUST 2006-AR7 MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2006-AR7, Appellee.

No. 4D17-3944.District Court of Appeal of Florida, Fourth District.February 6, 2019.Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Joel T. Lazarus, Senior Judge; L.T. Case No. 2017-CA-006417 (11).

Samantha V. Roussell, Doral, pro se.

Nancy M. Wallace of Akerman LLP, Tallahassee, and William P. Heller of Akerman LLP, Fort Lauderdale, for appellee.

PER CURIAM.

A homeowner appeals a final judgment of foreclosure entered in favor of The Bank of New York Mellon based on the bank’s motion for summary judgment. Because material issues of fact remain as to standing and the condition precedent of notice, we reverse and remand for further proceedings.

The bank filed a complaint against the homeowner for mortgage foreclosure and to reestablish a lost note. A copy of the note attached to the complaint listed America’s Wholesale Lender as the lender and did not contain any endorsements. The homeowner filed an answer and affirmative defenses, arguing that the bank lacked standing and failed to comply with the condition precedent of adequate notice concerning the default and acceleration.

The bank filed a lost note affidavit from an employee of the servicer, Nationstar Mortgage, LLC. The affidavit stated that the bank acquired the loan from the original lender, America’s Wholesale. The affidavit listed several transfers of servicing rights, ending with Nationstar. According to the affidavit, “[t]he Note was lost by the prior holder of the note, and prior to the transfer to Nationstar.”

The bank moved for summary judgment. The homeowner opposed the motion, arguing that the bank lacked standing and failed to comply with the condition precedent of notice. After a hearing, the trial court entered a final judgment of foreclosure.

An order granting summary judgment is reviewed de novo. Volusia Cty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). “Summary judgment cannot be granted unless the pleadings, depositions, answers to interrogatories, and admissions on file together with affidavits, if any, conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla. 4th DCA 2009). “It is the moving party’s burden to show, conclusively, the absence of any genuine issue of material fact.” Patel v. Aurora Loan Servs., LLC, 162 So. 3d 23, 24 (Fla. 4th DCA 2014).

The homeowner raised the issue of standing as an affirmative defense. “Whether a party has standing to bring an action is a question of law to be reviewed de novo.” Joseph v. BAC Home Loans Servicing, LP, 155 So. 3d 444, 446 (Fla. 4th DCA 2015). A party seeking to enforce a lost note must establish, inter alia, that it 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.” § 673.3091(1)(a), Fla. Stat. (2017).

The bank failed to satisfy the requirements of section 673.3091(1)(a). The affidavit from the bank’s servicer stated that “[t]he Note was lost by the prior holder of the note, and prior to the transfer to Nationstar,” the current servicer. Notably, the affidavit is unclear as to who lost the note because the affidavit does not state the identity of the prior noteholder. One could infer the prior noteholder was the servicer immediately prior to Nationstar, Green Tree Servicing LLC. However, it is also possible that the original lender, America’s Wholesale, was the prior holder of the note.

A computer screenshot attached as an exhibit to the affidavit purported to evidence the bank’s receipt of the note from America’s Wholesale. However, the screenshot did not contain any reference to America’s Wholesale. Additionally, the screenshot reflected an assignment by EMC Mortgage Corporation, but there is no indication in the affidavit or elsewhere in the record of this entity’s relation to the note and mortgage. Further, the screenshot listed Countrywide as the prior servicer, but the bank’s affidavit, which allegedly listed all prior servicers, made no mention of Countrywide.

Another exhibit to the affidavit, a computer printout, purported to show that the prior holder of the note was in possession of the note when the loss occurred. However, nothing in the exhibit indicates the identity of the prior holder of the note or when the loss occurred. Further, there is a conflict between the printout and the affidavit regarding the entity from whom Nationstar acquired the loan for servicing. A notation on the printout indicated that Nationstar acquired the loan from Specialized Loan Servicing, while the affidavit stated that Nationstar acquired the loan from Green Tree Servicing. These inconsistencies and conflicts, coupled with the vagueness regarding who lost the note, give rise to material issues of fact as to the bank’s standing.

Material issues of fact also exist as to the bank’s compliance with conditions precedent. “A plaintiff . . . must either factually refute any alleged affirmative defenses or establish that they are legally insufficient to defeat summary judgment before being entitled to a summary judgment of foreclosure.” Patel, 162 So. 3d at 24. The homeowner raised a legally sufficient defense by alleging that the bank failed to comply with the condition precedent of notice. See Fla. R. Civ. P. 1.120(c). The bank did not factually refute this defense. As such, summary judgment must be reversed and the case remanded for further proceedings. See Patel, 162 So. 3d at 25; Frost, 15 So. 3d at 906.

Reversed and remanded for further proceedings.

WARNER, CIKLIN and LEVINE, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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ALLEN HARRIS A/K/A ALLEN T. HARRIS, Appellant,
v.
THE BANK OF NEW YORK MELLON, FKA The Bank of New York, as trustee for the certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9; and ARLANA HARRIS A/K/A ARLANA D. BARR-HARRIS A/K/A ARLANA BARR-HARRIS, Appellees.

Case No. 2D17-2555.District Court of Appeal of Florida, Second District.Opinion filed December 28, 2018.Appeal from the Circuit Court for Hillsborough County; Emmett Lamar Battles, Judge.

Mark P. Stopa of Stopa Law Firm, LLC, Tampa (withdrew after briefing); and Latasha Scott of Lord Scott, PLLC, Tampa, for Appellants.

J. Kirby McDonough and Lauren G. Raines of Quarles & Brady, LLP, Tampa, for Appellee The Bank of New York Mellon, fka The Bank of New York, as trustee for the certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9.

No appearance for Appellee Arlana Harris a/k/a Arlana D. Barr-Harris a/k/a Alana Barr-Harris.

SLEET, Judge.

Allen Harris challenges the trial court’s final order denying his motion for attorney’s fees in the foreclosure action brought against him by Bank of New York Mellon f/k/a Bank of New York, as Trustee for Certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9 (the Trust).^[1] Harris successfully moved to have the foreclosure action involuntarily dismissed because the Trust failed to prove its standing as the holder of the note at the inception of the action as it had alleged in its complaint. After a hearing on attorney’s fees, the trial court denied Harris’ motion to recover fees under the mortgage contract and section 57.105(7), Florida Statutes (2014). Because record evidence established that there was a contractual relationship between the parties and because Harris was the prevailing party below, we reverse.

In 2007, Harris and his wife Arana executed a note and mortgage with the original lender, Countrywide Home Loans, Inc. On June 4, 2014, the Trust filed a lawsuit to foreclose the mortgage and enforce the terms of the note. In the complaint, the Trust alleged that it was the holder of the note, and it attached a copy of the note bearing a blank indorsement. A copy of the mortgage also was attached to the complaint. Paragraph 22 of the mortgage entitled the Trust to recover all attorney’s fees incurred in connection with this case.

Harris filed an answer and defenses, admitting that he had executed the note and mortgage but challenging the Trust’s standing to foreclose. The case proceeded to nonjury trial. The evidence adduced at trial is undisputed. The Trust called one witness, an employee of the loan servicer Specialized Loan Servicing (SLS), who testified that SLS, not the Trust, possessed the note at the time the foreclosure complaint was filed. The original blank-indorsed note and mortgage and an assignment dated April 12, 2012, which assigned the note and mortgage to the Trust, were admitted into evidence. At the close of the Trust’s case, Harris moved for involuntary dismissal and argued that the Trust did not prove that it was the holder of the note at the inception of the case because SLS possessed the note and there was no evidence of an agency relationship between the Trust and SLS. The trial court agreed and concluded that the Trust had failed to prove its standing at the inception of the case; the court therefore dismissed the lawsuit.

Having prevailed at trial, Harris filed a timely motion for attorney’s fees pursuant to the fee provision in the mortgage and section 57.105(7). The Trust filed a response, arguing that Harris could not recoup prevailing party attorney’s fees because the order of dismissal based upon lack of standing proved there was no contract between the parties and therefore Harris could not avail himself of the contractual fee provision or section 57.105(7). The trial court agreed and denied the motion for fees.

It is well settled that attorney’s fees may only be awarded when authorized by statute or contract. E.g., Snell v. Motts Contracting Servs., Inc., 141 So. 3d 605, 608 (Fla. 2d DCA 2014). Here, Harris relies on section 57.105(7) to statutorily transform the mortgage contract’s unilateral attorney fee provision into a reciprocal obligation. See Fla. Cmty. Bank, N.A. v. Red Road Residential, LLC, 197 So. 3d 1112, 1115 (Fla. 3d DCA 2016) (“[N]otwithstanding that the contractual fee provision is one-sided, entitling only one of the contract’s parties to prevailing party fees, by operation of law section 57.105(7) bestows on the other party to the contract the same entitlement to prevailing party fees.”). “Because it concerns a question of law, we review de novo a trial court’s final judgment determining entitlement to attorney’s fees based on a fee provision in the mortgage and the application of section 57.105(7).” Bank of N.Y. Mellon Tr. Co., N.A. v. Fitzgerald, 215 So. 3d 116, 118 (Fla. 3d DCA 2017).

Section 57.105(7) provides as follows:

If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to this contract. This subsection applies to any contract entered into on or after October 1, 1998.

Because section 57.105(7) shifts the responsibility for attorney’s fees, “the statute is in derogation of common law and must be strictly construed.” Fla. Cmty. Bank, 197 So. 3d at 1115.

In order to obtain prevailing party fees pursuant to section 57.105(7), the moving party must prove (1) that the contract provides for prevailing party fees, (2) that both the movant and opponent are parties to that contract, and (3) that the movant prevailed. See Nationstar Mortg. LLC v. Glass, 219 So. 3d 896, 898 (Fla. 4th DCA 2017) (en banc). Here, it is undisputed that the mortgage contract contains a provision that provides for prevailing party fees and that Harris prevailed at trial; therefore the only question before us is whether both Harris and the Trust were parties to the contract. We conclude that they were.

We find the Fifth District’s opinion in Madl v. Wells Fargo Bank, N.A., 244 So. 3d 1134 (Fla. 5th DCA 2017), to be instructive. In that case, at the time of inception of the lawsuit, Wells Fargo attached to its complaint a copy of the note, which was payable to the original lender and which contained no indorsements or allonges. The Madls then raised Wells Fargo’s lack of standing in their answer. At trial, Wells Fargo introduced the purported original note with an undated blank indorsement allegedly signed by the original lender. However, Wells Fargo’s witness could not testify as to when the indorsement was made. The Fifth District reversed the final judgment of foreclosure for lack of standing at the inception of the case, noting that “[w]here the plaintiff relies on an undated indorsement to establish its standing, it must prove that the indorsement was made prior to the filing of the complaint and that the indorsed note was in the plaintiff’s possession at the time the suit was filed.” Id. at 1136. The Fifth District nevertheless granted the Madls’ motion for appellate attorney’s fees. Id. at 1137. The Fifth District subsequently denied the bank’s motion for rehearing, which specifically challenged the attorney fee award:

Under current Florida law, the plaintiff in a mortgage foreclosure suit must prove that it has standing both at the time the suit is filed and at the time of trial; failure to have standing at either time requires dismissal of the suit. . . . [W]e found that [Wells Fargo] lacked standing when it filed suit. However, it did appear to have standing by the time of trial as a result of [the] delivery of the alleged original note.

[The Madls’] mortgage had been assigned to [Wells Fargo]. Like many others, the subject mortgage provides that only the lender is entitled to recover its litigation and appellate attorney’s fees incurred in successful collection or foreclosure actions. . . .

In order to obtain prevailing party fees pursuant to section 57.105(7), the moving party must prove three requirements: (1) the contract provides for prevailing party fees, (2) both the movant and opponent are parties to that contract, and (3) the movant prevailed. First . . . the [Madls’] mortgage contains the prevailing party fee provisions. Second, by virtue of the assignment and the indorsement, [Wells Fargo] joined [the Madls], the original mortgagors, as parties to the contract. Third, [the Madls] prevailed on appeal, resulting in dismissal of the underlying suit. Having satisfied all three requirements, [the Madls] are entitled to recover their attorney’s fees and expenses from [Wells Fargo].

Id. at 138-39 (citations omitted).

The instant case is on point with Madl. Here, the Trust failed to prove that it had standing at the time it filed the lawsuit. Nevertheless, the record demonstrates that the note and mortgage were assigned to the Trust in 2012. As such, the Trust became a party to the mortgage contract and was subject to the fee provision therein. And the requirements of section 57.105(7) are satisfied where it can be established that the prevailing party and its opponent are both parties to a contract that contains a prevailing party fee provision. Accordingly, Harris is entitled to an award of attorney’s fees from the Trust pursuant to the mortgage contract and section 57.105(7).

In so holding, we recognize that the Third, Fourth, and Fifth Districts each have held that when a party prevails by establishing that the plaintiff completely failed to prove standing, there is no longer a contract between the parties and no basis upon which to enforce a fee provision. See Glass, 219 So. 3d at 899 (denying a motion for appellate attorney’s fees and holding that “[a] party that prevails on its argument that dismissal is required because the plaintiff lacked standing to sue upon the contract cannot recover fees based upon a provision in that same contract”); Fitzgerald, 215 So. 3d at 121 (“Because Fitzgerald successfully obtained a judgment below that the Bank lacked standing to enforce the mortgage and note against her, we find that no contract existed between [the parties] that would allow Fitzgerald to invoke the mutuality provisions of section 57.105(7).”); HFC Collection Ctr., Inc. v Alexander, 190 So. 3d 1114 (Fla 5th DCA 2016)(reversing fee award where HFC could not establish that Alexander’s credit card debt had been assigned to it by American Express and holding that because no contract existed between the parties “`there [wa]s no basis to invoke the compelled mutuality provisions of’ section 57.105(7)” (quoting Fla. Med. Ctr., Inc. v. McCoy, 657 So. 2d 1248, 1252 (Fla. 4th DCA 1995))). However, we would initially note that these cases are factually distinguishable from the instant case.

In all of these cases, the evidence demonstrated that no contractual relationship existed between the parties. In Fitzgerald, the Third District reversed a fee award against the bank in a mortgage foreclosure because “[t]here was no Assignment of Mortgage, or any other document evidencing a transfer to the [Bank]” and accordingly “no contract existed between the parties.” 215 So. 3d at 117.^[2] In Alexander, the appellant, who was the borrower in a credit card agreement, affirmatively proved that there was no assignment of that agreement to the appellee bank, who was the plaintiff below. Due to that lack of assignment, there was no evidence to establish that the bank was a party to the agreement.^[3]Additionally, because Alexander involved credit card debt and not mortgage foreclosure, the bank’s lack of standing in that case was based on the fact that it was never made a party to the credit card agreement. Here, the Trust’s failure to prove standing turned on the very specific proof requirements involved in foreclosure law and did not establish that the Trust was not a party to the mortgage contract. Finally, the Glass opinion does not include enough facts to ascertain whether there was or was not a contractual relationship between Nationstar and Glass, whether there was an assignment of the note and mortgage, or whether Nationstar had standing at the time of trial.

In the instant case, however, the 2012 assignment that transferred the note and mortgage to the Trust was direct evidence that the Trust was a party to the mortgage contract regardless of the fact that the Trust failed to establish its standing to bring the foreclosure action. Whether a lender can establish standing as a holder of the note is predicated on its proving that it has possession—directly or through an agency relationship—of the instrument that is either executed in its favor or has a blank or special indorsement. That is an entirely different question than whether the lender and borrower are parties to a mortgage contract containing a fee provision. We therefore conclude that proof of standing is not required to establish a contractual relationship between the parties.

Although this factual distinction exists between the instant case and the cases relied on by the Trust, the broad language in those cases requires that we certify conflict with Fitzgerald and Glass to the extent that these opinions hold that a party’s failure to establish standing in a mortgage foreclosure case necessarily means that no contract existed between the parties.^[4]

Finally, we address the inequity of denying a prevailing party attorney’s fees required by contract simply because the opposing party could not prove its standing to prosecute the claim. The purpose of section 57.105(7) is to level the playing field and “to ensure that each party gets what it gives[, i.e.,] the ability to recover fees in litigation arising under these contractual provisions.” Fla. Hurricane Protection & Awning Inc. v. Pastina, 43 So. 3d 893, 895 (Fla. 4th DCA 2010). Here, the Trust sued Harris alleging that it had a contractual relationship with him and that it had standing to foreclose on the mortgage and enforce the note. Harris was served with the complaint, hailed into court, and forced to retain an attorney. He admitted the contractual relationship but challenged the Trust’s evidence of standing. Ultimately, the trial court granted an involuntary dismissal based upon lack of proof of standing, which is fundamentally different than a dismissal based upon a party affirmatively proving that the plaintiff is not a party to the contract.

There are many other scenarios in which Harris could have prevailed and recovered his attorney’s fees. If the Trust had voluntarily dismissed the lawsuit, Harris would have been entitled to fees. If the Trust had failed to prove a default or the amount of indebtedness and the court granted an involuntary dismissal, Harris would have been entitled to fees. As such, it seems inequitable to deny him his fees in the instant case simply because the action was involuntarily dismissed due to the Trust’s failure to establish its standing as the holder of the note.

Because the record before us contains evidence that establishes the Trust as a party to the mortgage contract, we reverse and remand for an order granting Harris’ motion for attorney’s fees.

Reversed and remanded; conflict certified.

NORTHCUTT and CRENSHAW, JJ., Concur.

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

[1] Arlana Harris was a named defendant below but makes no appearance in this appeal. She is included as an appellee pursuant to Florida Rule of Appellate Procedure 9.020(g)(2).

[2] Also, in support of its holding, Fitzgerald cites cases wherein there was no contractual basis for attorney’s fees because the mortgage was procured by fraud and/or the borrower’s signature was determined to be a forgery. See Fla. Cmty. Bank, N.A. v. Red Road Residential, LLC, 197 So. 3d 1112 (Fla. 3d DCA 2016); Bank of N.Y. Mellon v. Mestre, 159 So. 3d 953 (Fla. 5th DCA 2015).

[3] In all of the cases cited within Alexander, the underlying contract either did not exist or the party moving for fees was not a party thereto. See Mestre, 159 So. 3d 953; Surgical Partners, LLC, v. Choi, 100 So. 3d 1267 (Fla. 4th DCA 2012); Novastar Mortg., Inc. v. Strassburger, 855 So. 2d 130 (Fla. 4th DCA 2003).

[4] We need not certify conflict with Alexander, 190 So. 3d 1114, which was not a mortgage foreclosure case and therefore is not in direct conflict with our holding here.

 

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MARK B. SACKS and BARBARA SACKS, Appellants,
v.
THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, as Trustee for the Certificate holders of the CWMBS, Inc., Mortgage Pass-Through Trust 2005-HYB7 Mortgage Pass-Through Certificates, Series 2005-HYB7, Appellee.

No. 4D17-2122.District Court of Appeal of Florida, Fourth District.December 19, 2018.Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Roger B. Colton, Judge; L.T. Case No. 50-2016-CA-003944-XXXX-MB.

Bruce K. Herman of The Herman Law Group, P.A., Fort Lauderdale, for appellants.

Alexis Fields of Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Fort Lauderdale, for appellee.

OR QUESTION OF GREAT PUBLIC IMPORTANCE ON MOTIONS FOR CLARIFICATION, REHEARING, REHEARING EN BANC AND CERTIFICATION OF CONFLICT

FORST, J.

We deny Appellants’ motion for clarification and rehearing en banc and Appellee’s motion for rehearing, rehearing en banc, and certification of conflict or question of great public importance. We nonetheless withdraw our previously issued opinion and substitute the following.

Appellants Mark and Barbara Sacks appeal a final summary judgment of foreclosure in favor of Appellee, The Bank of New York Mellon (“the Bank”). Appellants raise several issues on appeal. We affirm without comment with respect to all issues with one exception. The trial court erred in admitting the payment history submitted by the Bank to establish the amount owed under the note. Accordingly, we reverse the judgment and remand for an evidentiary hearing on that issue. We otherwise affirm on the remaining issues raised.

Background

Appellants defaulted on their mortgage, and the Bank filed a foreclosure complaint and subsequently moved for summary judgment. In support of its motion, the Bank filed a tabulation of Appellants’ payment history under the terms of the note and mortgage and an accompanying affidavit seeking to establish the business records predicate for admission. The affiant was a document coordinator of the Bank’s servicer, Bayview Loan Servicing (“BLS”). The payment history attached to the affidavit was generated by BLS and it incorporated tabulations by Bank of America (“BoA”), a prior servicer of the loan. The entirety of the affidavit’s discussion of BLS’s business records was as follows:

The information in this affidavit is taken from BLS’s business records. I have personal knowledge of BLS’s procedures for creating these records. They are: (a) made at or near the time of the occurrence of the matters recorded by persons with personal knowledge of the information in the business record, or from information transmitted by persons with personal knowledge; (b) kept in the course of BLS’s regularly conducted business activities; and (c) it is the regular practice of BLS to make such records.

At the summary judgment hearing, with respect to the BLS affidavit, Appellants argued the absence of any mention of “[BoA’s] records, how BLS got a hold of them, and how they . . . brought those records in with a sufficient boarding process.” The trial court nonetheless granted the Bank’s motion for summary judgment and entered a final judgment of foreclosure against Appellants.

Analysis

“The standard of review for evidentiary rulings is abuse of discretion.” Holt v. Calchas, LLC, 155 So. 3d 499, 503 (Fla. 4th DCA DCA 2015). However, “whether evidence is hearsay and whether evidence fits within an exception to the hearsay rule are questions of law reviewed de novo.” Washburn v. Washburn, 211 So. 3d 87, 90 (Fla. 4th DCA 2017). “[G]enerally the courts hold the moving party for summary judgment or decree to a strict standard and the papers supporting [the movant’s] position are closely scrutinized. . . .” OneWest Bank, FSB v. Jasinski,173 So. 3d 1009, 1014 (Fla. 2d DCA 2015) (quoting Gonzalez v. Chase Home Fin. LLC, 37 So. 3d 955, 958 (Fla. 3d DCA 2010)).

“All affidavits in support of a motion for summary judgment `shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.'” Lindsey v. Cadence Bank, N.A., 135 So. 3d 1164, 1167 (Fla. 1st DCA 2014) (quoting Fla. R. Civ. P. 1.510(e)). “The opposing party is not required to file a counter-affidavit to defeat the motion. . . .” Id.

Here, the Bank sought to meet the business records exception to hearsay for its records, including the payment history, via affidavit. The affidavit needed to demonstrate:

(1) that the record was made at or near the time of the event; (2) that it was made by or from information transmitted by a person with knowledge; (3) that it was kept in the ordinary course of a regularly conducted business activity; and (4) that it was a regular practice of that business to make such a record.

Bank of N.Y. v. Calloway, 157 So. 3d 1064, 1069 (Fla. 4th DCA 2015) (citing Yisrael v. State, 993 So. 2d 952, 956 (Fla. 2008)).

Because the servicer’s (BLS) records incorporated a payment history generated by a predecessor servicer (BoA), the additional requirements of demonstrating reliance and trustworthiness attached. This Court’s opinion in Calloway explains:

Where a business takes custody of another business’s records and integrates them within its own records, the acquired records are treated as having been “made” by the successor business, such that both records constitute the successor business’s singular “business record.” United States v. Adefehinti, 510 F.3d 319, 326 (D.C. Cir. 2007), as amended (Feb. 13, 2008). However, since records crafted by a separate business lack the hallmarks of reliability inherent in a business’s self-generated records, proponents must demonstrate not only that “the other requirements of [the business records exception rule] are met” but also that the successor business relies upon those records and “the circumstances indicate the records are trustworthy.” United States v. Childs, 5 F.3d 1328, 1333 (9th Cir. 1993).

. . . .

This principle is codified within section 90.803(6) itself, which provides trial courts the ability to exclude documents otherwise fitting the business records exception where “the sources of information or other circumstances show lack of trustworthiness.” § 90.803(6)(a), Fla. Stat. (2008).

157 So. 3d at 1071 (alteration in original) (emphasis added) (footnote omitted). Trustworthiness can be established by either (1) “providing evidence of a business relationship or contractual obligation between the parties that ensures a substantial incentive for accuracy,” or (2) “the successor business itself may establish trustworthiness by independently confirming the accuracy of the third-party’s business records upon receipt.” Id. at 1072.

In Calloway, we found the bank’s witness confirmed the trustworthiness of the relied-upon third-party business records by testifying that the bank reviewed the payment history for accuracy before inputting the payment information into its own system. Id. We additionally noted that, “even had [the witness] not so testified, the circumstances of the loan transfer itself would have been sufficient to establish trustworthiness given the business relationships and common practices inherent among lending institutions acquiring and selling loans.” Id.

Somewhat similarly, in Nationstar Mortg., LLC v. Berdecia, 169 So. 3d 209 (Fla. 5th DCA 2015), the court found a witness’s entry of records created by a prior servicer proper “so long as all the requirements of the business records exception are satisfied, the witness can testify that the successor business relies upon those records, and the circumstances indicate the records are trustworthy.” Id. at 216; see also Le v. U.S. Bank, 165 So. 3d 776, 778 (Fla. 5th DCA 2015) (holding that a witness properly laid the foundation for a prior servicer’s records because the witness “testified that she was familiar with industry standards in recording and maintaining the records and that the records received from the prior servicer were tested for accuracy and compliance with industry standards via a boarding process before the information was input”).

On the other hand, the Fifth District reversed a judgment of foreclosure in Hidden Ridge Condominium Homeowners Ass’n, Inc. v. Onewest Bank, N.A., 183 So. 3d 1266 (Fla. 5th DCA 2016), in part due to the failure of an affidavit filed on behalf of the bank to address whether the foreclosing bank verified a predecessor’s payment history for accuracy and compliance with industry standards. Id. at 1270. The affidavit, in fact, made no mention of the predecessor. Id. at 1268; see also Channell v. Deutsche Bank Nat’l Tr. Co., 173 So. 3d 1017, 1020 (Fla. 2d DCA 2015) (remanding for establishment of the amount due because there was no testimony on whether a predecessor’s loan documents had been verified for accuracy nor whether the witness was familiar with the predecessor’s record-keeping system).

Here, the relevant portion of the Bank representative’s affidavit merely recited the four elements of the business records exception, as applied to BLS’s own records. Just as in Hidden Ridge Condominium, the affidavit said nothing about incorporating the predecessor servicer’s payment records or, indeed, anything about the predecessor at all. Without any explanation as to how BoA’s payment records were verified for accuracy or how the Bank acquired them, the trustworthiness requirement was not met. Thus, we must conclude “[t]he record fails to demonstrate that an adequate foundational predicate was established, and the loan . . . records relied on to establish the outstanding debt constituted inadmissible hearsay.” Channell, 173 So. 3d at 1020 (citing §§ 90.802, 90.803(6), Fla. Stat. (2014)). Without the payment history, there was insufficient evidence to support the amount owed under the loan, and summary judgment was granted in error on this point.

In their brief, Appellants also challenged the trial court’s rulings that the Bank had standing, that their affirmative defenses had been refuted, and that there was sufficient evidence BLS was the servicer of the loan. As to these issues, we conclude that no error occurred. Thus, these rulings are conclusively established for the purpose of further proceedings.

Conclusion

The Bank failed to establish a foundation for entry of its business records concerning the amount due and owing. Thus, “there is insufficient evidence to support the amount due and owing under the loan,” and “we must reverse and remand for further proceedings to properly establish the amount due and owing.” Channell, 173 So. 3d at 1020.

Affirmed in Part, Reversed and Remanded in Part.

WARNER and MAY, JJ., concur.

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H/T DUBIN LAW OFFICES

 

THE BANK OF NEW YORK MELLON, etc., Petitioner,
v.
DIANNE D. GLENVILLE a/k/a DIANE D. GLENVILLE a/k/a DIANE GLENVILLE, et al., Respondents.

No. SC17-954.Supreme Court of Florida.September 6, 2018.Application for Review of the Decision of the District Court of Appeal — Certified Direct Conflict of Decisions Second District — Case No. 2D15-5198 (Manatee County).

Anthony R. Smith, Kathryn I. Kasper, and Kendra J. Taylor of Sirote & Permutt, P.C., Winter Park, Florida, for Petitioner.

Sheryl A. Edwards of The Edwards Law Firm, PL, Sarasota, Florida, for Respondents.

CANADY, C.J.

This case involves a dispute between the former record owners of certain real property and a subordinate lienholder over surplus funds resulting from a judicial foreclosure sale of the property. The crux of the dispute is whether the subordinate lienholder timely filed its claim to the surplus amount under the provisions of chapter 45, Florida Statutes (2015), governing judicial sales. The statute requires that a claim to surplus funds be filed within “60 days after the sale.” The specific issue presented is whether the sixty-day period begins upon the public auction of the property, the clerk’s issuance of the certificate of title, or some other event.

This Court has for review Bank of New York Mellon v. Glenville, 215 So. 3d 1284, 1285 (Fla. 2d DCA 2017), in which the Second District Court of Appeal concluded that, under section 45.031, the subordinate lienholder’s claim was untimely because it was not filed within sixty days of the public auction. In so holding, the Second District certified conflict with Straub v. Wells Fargo Bank, N.A., 182 So. 3d 878, 881 (Fla. 4th DCA 2016), in which the Fourth District Court of Appeal concluded that the sixty-day period does not begin until the clerk issues and files the certificate of title. This Court granted discretionary review based on the certified conflict. This Court has jurisdiction. See art. V, § 3(b)(4), Fla. Const.

We conclude that the sixty-day period begins upon the clerk’s issuance of the certificate of disbursements—something the clerk is tasked with doing “[o]n filing a certificate of title.” § 45.031(7)(a), Fla. Stat. Section 45.032(3), Florida Statutes (2015)—which neither Glenville nor Straub considered—makes clear beyond any doubt that the sixty-day period begins upon issuance of the certificate of disbursements. Accordingly, we quash Glenville. We also disapprove the certified conflict case of Straub to the extent the Fourth District held that the sixty-day period begins upon the issuance of the certificate of title as opposed to the certificate of disbursements.^[1]

I. BACKGROUND

Before presenting the facts and procedural history of Glenville and then discussing Straub, we provide an overview of the general procedures for judicial foreclosure sales.

Judicial Foreclosure Procedures—Generally

Section 45.031, Florida Statutes (2015)—titled “Judicial sales procedure”— as well as certain other sections of the Florida Statutes, address judicial foreclosure sales and set forth the procedures that “may be followed as an alternative to any other sale procedure if so ordered by the court.” § 45.031, Fla. Stat. Under section 45.031, the trial court, “[i]n the order or final judgment,” “shall direct the clerk to sell the property at public sale on a specified day.” § 45.031(1)(a), Fla. Stat. A notice of sale shall then be published at certain times and shall contain certain information, including “[t]he time and place of sale.” § 45.031(2), Fla. Stat. The winning bidder is required to post a deposit “[a]t the time of the sale” and must pay the remaining balance within a prescribed period. § 45.031(3), Fla. Stat. “After a sale of the property,” the clerk is required to “promptly file a certificate of sale.” § 45.031(4), Fla. Stat. “If no objections to the sale are filed within 10 days after filing the certificate of sale,” the clerk is then required to file a “certificate of title.” § 45.031(5), Fla. Stat. Upon the filing of the certificate of title, “the sale shall stand confirmed.” § 45.031(6), Fla. Stat. “On filing a certificate of title,” the clerk is then required to disburse the proceeds “in accordance with the order or final judgment” and file a “certificate of disbursements.” § 45.031(7)(a)-(b), Fla. Stat. “If there are funds remaining after payment of all disbursements required by the final judgment of foreclosure and shown on the certificate of disbursements, the surplus shall be distributed as provided in this section [45.031] and ss. 45.0315-45.035.” § 45.031(7)(d), Fla. Stat.

Section 45.031 was amended in 2006 to require that the final judgment of foreclosure, the notice of sale, and the certificate of disbursements include certain language informing subordinate lienholders and other persons claiming a right to any surplus funds that they must file a claim with the clerk of court within “60 days after the sale.” See ch. 2006-175, § 1, at 2, 3, 5, Laws of Fla. (amending § 45.031(1)(a), (2)(f), (7)(b), Fla. Stat., respectively). Section 45.031 does not define “sale” or “60 days after the sale.” But as the cross-references in section 45.031(7)(d) indicate, other sections of chapter 45 also govern surplus funds. Those other sections include section 45.032, which sets forth detailed requirements and procedures relating to the disbursement of surplus funds. As addressed more fully below, section 45.032 itself prescribes a sixty-day period in the specific context of the filing of claims for surplus funds—a sixty-day period beginning upon the issuance of the certificate of disbursements. See § 45.032(3), Fla. Stat.

Glenville —the Case on Review

Respondents, Diane and Mark Glenville, were the defendant property owners in a foreclosure action. Glenville, 215 So. 3d at 1285 n.1. Petitioner, The Bank of New York Mellon, f/k/a The Bank of New York, as Successor Trustee to JPMorgan Chase Bank, N.A., as Trustee on behalf of the Certificateholders of the CWHEQ, Inc., CWHEQ Revolving Home Equity Loan Trust, Series 2006-D (Mellon), was the holder of a second mortgage on the property. A first mortgage on the property was held by JP Morgan Chase, and a third mortgage on the property was held by Florida Housing Finance Corporation (Florida Housing).

In May 2014, JP Morgan Chase brought a foreclosure action against the Glenvilles, seeking to foreclose its interest under the first mortgage. A Final Judgment of Foreclosure was entered against the Glenvilles on May 28, 2015. The final judgment set a public auction date of July 2, 2015, and—in accordance with section 45.031(1)(a), Florida Statutes—included the requisite statement regarding a potential surplus. The public auction was held on July 2, 2015. The clerk issued the certificate of sale on July 6, 2015, after the holiday weekend. On July 14, 2015, the clerk issued the certificate of title. And on July 29, 2015, the clerk issued the certificate of disbursements, which, in accordance with section 45.031(7)(b), Florida Statutes, included the requisite language regarding surplus funds. The certificate of disbursements reflected a surplus of $86,093.27.

On August 4, 2015, Florida Housing filed a claim asserting its right to $20,573.64 of the surplus amount. On September 1, 2015—sixty-one days after the public auction—the Glenvilles filed a Verified Claim for Mortgage Foreclosure Surplus. In their motion, the Glenvilles admitted that Florida Housing’s claim was timely and requested that the trial court issue an order disbursing $20,573.64 of the surplus to Florida Housing and the remainder to the Glenvilles. The next day, on September 2, 2015, Mellon filed a claim asserting its right to the entire surplus amount. Mellon’s claim was filed more than sixty days after the public auction but within sixty days of the clerk’s filing of each of the following: the certificate of sale, the certificate of title, and the certificate of disbursements. No other relevant claims to the surplus were filed.

On November 2, 2015, the trial court held a hearing on the parties’ competing claims for the surplus. On November 5, 2015, the trial court issued an Order to Disburse Surplus Funds, directing the clerk to disburse $20,573.64 of the surplus to Florida Housing, and the balance to the Glenvilles.^[2] The trial court rejected Mellon’s claim as untimely under section 45.031 because it “was not submitted within 60 days of the foreclosure sale held on July 2, 2015.” Mellon appealed to the Second District, arguing “that a foreclosure sale is not complete until the clerk issues the certificate of sale.” Glenville, 215 So. 3d at 1285. Mellon thus contended that its claim was timely because it was filed within sixty days of issuance of the certificate of sale.

The Second District rejected Mellon’s argument and affirmed the trial court’s order denying Mellon’s claim for surplus funds. Id. The Second District primarily focused on section 45.031(7)(b) and concluded that the statutory provision unambiguously provided that the cutoff for submitting claims for surplus funds is sixty days from the date of the public auction. Id. at 1285-86. The Second District observed that section 45.031(7)(b) “only refers to the `sale,’ not the `certificate of sale,'” and then noted that “section 45.031 assigns particular and distinct meanings to the terms `sale’ and `certificate of sale’ and does not use them interchangeably.” Id. at 1286. For example, the Second District noted that section 45.031(4) uses the two terms separately and distinctly in the same sentence. Id. Thus, according to the Second District, adopting Mellon’s argument would not only render section 45.031(4) meaningless but “confuse the meaning of other subsections of the statute.” Id. The Second District then supported its conclusion by noting that two of its previous decisions used the public auction “as the start date for the sixty-day period.” Id.(citing Mathews v. Branch Banking & Tr. Co., 139 So. 3d 498, 499-500 (Fla. 2d DCA 2014); Dever v. Wells Fargo Bank Nat’l Ass’n, 147 So. 3d 1045, 1047 (Fla. 2d DCA 2014)).

The Second District also rejected a separate argument from Mellon that the sixty-day period should begin from the day the clerk issues the certificate of title. The Second District concluded that Mellon waived that argument by not raising it prior to rehearing. Id.^[3] Nevertheless, the Second District noted that Mellon’s purportedly waived argument was consistent with the Fourth District’s recent decision in Straub, which held that the sixty-day cutoff period begins when the clerk issues and files the certificate of title. Id. at 1287. The Second District then certified conflict with Straub, while opining that Straub‘s construction of the term “sale” “confuses the meaning of several subsections of section 45.031.” Id. (citing § 45.031(1)(a), (2), (3), (5), and (6), Fla. Stat.).

Straub —the Certified Conflict Case

In Straub, the subordinate lienholders filed their claims to the surplus more than sixty days after the public auction and the filing of the certificate of sale, but not more than sixty days after the clerk’s filing of the certificate of title. Straub, 182 So. 3d at 880. The trial court determined that the subordinate lienholders’ claims were timely. Id. at 879. On appeal to the Fourth District, the homeowner argued that the claims were untimely because the sixty-day period in section 45.031 “begins to run when the property is purchased at the auction and the certificate of sale is filed.” Id. at 880. The Fourth District in Straub rejected the homeowner’s argument and concluded—without mentioning the certificate of disbursements—that the sixty-day period begins to run upon the issuance and filing of the certificate of title. Id. at 881. Straub began by noting that the case presented “an issue of first impression under today’s version of section 45.031.” Id. at 880. Straub then looked to Allstate Mortgage Corp. of Florida v. Strasser, 286 So. 2d 201 (Fla. 1973), in which this Court interpreted a previous version of section 45.031. Straub, 182 So. 3d at 880-81.

In Strasser, this Court interpreted the meaning of the term “sale” in section 45.031(1), Florida Statutes (1971), but in the context of the right of redemption. Strasser, 286 So. 2d at 201. The statutory language at issue was added in 1971 and provided as follows: “In cases when a person has an equity of redemption, the court shall not specify a time for the redemption, but the person may redeem the property at any time before the sale.” Id. at 202 (quoting § 45.031(1), Fla. Stat. (1971)). After a default judgment was entered against the property owner in an action to foreclose a mechanic’s lien, the property was sold at public auction. Id. at 201-02. The clerk issued a certificate of sale the day after the auction. Id. at 202. Several days later, before the certificate of title was issued, the circuit court ordered the clerk to accept the property owner’s payment in redemption. Id. at 202, 203. The corporation that purchased the property at public auction appealed the trial court’s order. Id. at 202. On appeal, the Third District Court of Appeal affirmed the trial court, concluding that the Legislature intended the term “sale” to refer to the actual transfer of ownership that takes place upon the issuance of the certificate of title. Id. at 202-03. The Third District first noted that the 1971 statutory amendment was in derogation of the common law right to redeem property up until the entry of an order confirming the sale and thus must be strictly construed. Id. at 202. The Third District then noted that the Legislature neither defined the term “sale” nor indicated its intended meaning, so the Third District looked to various definitions before concluding that the Legislature intended the term “sale” to refer to the actual transfer of ownership. Id. at 202-03. And the Third District observed that, under section 45.031(3), Florida Statutes (1971), the transfer of ownership takes place upon the issuance of the certificate of title. Id. at 203. On review, this Court affirmed the decision of the Third District by quoting the Third District’s analysis and then concluding that the district court “correctly interpreted” section 45.031(1), Florida Statutes (1971). Id.

After reviewing Strasser, the Fourth District in Straub concluded that Strasser‘s reasoning should control the interpretation of the term “sale” in “today’s version of [section 45.031]”—that is, the transfer of ownership completed upon filing of the certificate of title. Straub, 182 So. 3d at 881. Straub recognized that the Legislature had partially superseded Strasser in 1993 by enacting section 45.0315, which codified the right of redemption and provided that the property could be redeemed at “any time before the later of the filing of a certificate of sale by the clerk of the court or the time specified in the judgment, order, or decree of foreclosure.” Id.(quoting § 45.0315, Fla. Stat. (2014)). But Straub concluded that the Legislature merely “created a specific window for exercising the right of redemption” and that nothing in the enactment of section 45.0315 suggested that the Legislature “intended to change the plain meaning of the word `sale’ used elsewhere in the statute.” Id.

II. ANALYSIS

The certified conflict issue presented in this case requires us to construe the term “60 days after the sale,” as used in section 45.031, Florida Statutes (2015). This issue is one of statutory interpretation, which is a pure question of law that this Court reviews de novo. See Borden v. E.-European Ins. Co., 921 So. 2d 587, 591 (Fla. 2006).

In 2006, in an apparent response to the growing number of foreclosure sales that were resulting in surplus amounts, the Legislature amended chapter 45, Florida Statutes, by enacting “[a]n act relating to foreclosure proceedings.” Ch. 2006-175, Laws of Fla. (title). As indicated above, the 2006 act amended section 45.031 to require that certain statements regarding potential surplus amounts be included in the final judgment of foreclosure, the notice of sale, and the certificate of disbursements. See ch. 2006-175, § 1, at 1-6, Laws of Fla. The 2006 act also created several new statutory sections within chapter 45 to specifically address foreclosure surplus funds. And the 2006 act amended existing section 45.031(7) to add paragraph (d) to directly cross-reference those new statutory sections. See ch. 2006-175, § 1, at 6, Laws of Fla. Namely, section 45.031(7)(d), Florida Statutes (2015), provides that “[i]f there are funds remaining after payment of all disbursements required by the final judgment of foreclosure and shown on the certificate of disbursements, the surplus shall be distributed as provided in this section [45.031] and ss. 45.0315-45.035.”^[4] The newly created statutory sections include section 45.032, titled “Disbursement of surplus funds after judicial sale.”

Because we find section 45.032—and in particular subsection 45.032(3)—to be dispositive of the conflict issue, we begin by examining the relevant provisions of section 45.032. We then explain why section 45.032(3) requires the conclusion that the sixty-day period in section 45.031(7)(b)—and elsewhere in section 45.031—begins to run upon the issuance of the certificate of disbursements.

Section 45.032

As an initial matter, section 45.032(1) defines certain terms that apply not just for purposes of section 45.032 but “[f]or purposes of ss. 45.031-45.035.” Section 45.032(1)(c) specifically defines the term “surplus” to mean “the funds remaining after payment of all disbursements required by the final judgment of foreclosure and shown on the certificate of disbursements.” (Emphasis added.)

Among other things, section 45.032(2) then “establishe[s] a rebuttable legal presumption that the owner of record on the date of the filing of a lis pendens is the person entitled to surplus funds after payment of subordinate lienholders who have timely filed a claim.” (Emphasis added.)

Section 45.032(3) then references a very specific sixty-day period: “During the 60 days after the clerk issues a certificate of disbursements, the clerk shall hold the surplus pending a court order.” (Emphasis added.) Each of the three paragraphs in subsection (3) go on to reference this sixty-day period in the specific context of the filing of claims for surplus funds. Paragraph (a) provides, in part, as follows: “If the owner of record claims the surplus during the 60-day period and there is no subordinate lienholder, the court shall order the clerk to deduct any applicable service charges from the surplus and pay the remainder to the owner of record.” § 45.032(3)(a), Fla. Stat. (emphasis added). Paragraph (b) then provides, in part, as follows:

If any person other than the owner of record claims an interest in the proceeds during the 60-day period or if the owner of record files a claim for the surplus but acknowledges that one or more other persons may be entitled to part or all of the surplus, the court shall set an evidentiary hearing to determine entitlement to the surplus.

§ 45.032(3)(b), Fla. Stat. (emphasis added). Finally, paragraph (c) provides, in part, that “[i]f no claim is filed during the 60-day period, the clerk shall appoint a surplus trustee from a list of qualified surplus trustees as authorized in s. 45.034.” § 45.032(3)(c), Fla. Stat. (emphasis added).^[5]

Lastly, the Legislature made clear that disputes over surplus funds have no bearing on the validity of the foreclosure sale itself and “do not in any manner affect or cloud the title of the purchaser at the foreclosure sale of the property.” § 45.032(5), Fla. Stat.

Statutory Interpretation

In concluding that the sixty-day period referenced in section 45.031 is triggered by the public auction, the Second District in Glenville did not take into account the specific sixty-day period identified in section 45.032(3). Instead, the Second District focused largely on what it considered to be a clear meaning of section 45.031(7)(b) that avoided confusing the meaning of other subsections of section 45.031. Glenville, 215 So. 3d at 1286-87. Similarly, the Glenvilles point to numerous instances in section 45.031 in which the term “sale” refers to the public auction, and they appear to urge this Court to follow the principle that presumes “that when the legislature uses the same term multiple times in the same statute, that term carries the same meaning each time it is used.” Nat’l Auto Serv. Centers, Inc. v. F/R 550, LLC, 192 So. 3d 498, 507 (Fla. 2d DCA 2016) (citing Rollins v. Pizzarelli, 761 So. 2d 294, 298 (Fla. 2000)). On the other hand, Mellon’s various arguments can be summed up as follows: in no event should the sixty-day period begin before the issuance of the certificate of sale.

We agree with Mellon that the sixty-day period is not triggered by the public auction. In doing so, we conclude that the sixty-day period in section 45.031(7)(b) must be understood in a way that is consistent with the sixty-day period in section 45.032(3). Ultimately, there cannot be two different sixty-day cutoff periods for filing claims for surplus funds.

As with any matter involving an issue of statutory interpretation, courts must first look to the actual language of the statute and “examine the statute’s plain meaning.” Lopez v. Hall, 233 So. 3d 451, 453 (Fla. 2018). “When the language of the statute is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning.” A.R. Douglass, Inc., v. McRainey, 137 So. 157, 159 (Fla. 1931). Here, the Second District concluded that the meaning of the term “sale” as used in section 45.031(7)(b) clearly and unambiguously referred to the public auction, given the Legislature’s use of the same term in “other subsections of the statute.” Glenville,215 So. 3d at 1286 (emphasis added). But the Second District stopped short in its consideration of relevant provisions of the statutory scheme for judicial sales. This Court has long recognized that the “plain language” approach

is subject to the qualification that if a part of a statute appears to have a clear meaning if considered alone but when given that meaning is inconsistent with other parts of the same statute or others in pari materia, the Court will examine the entire act and those in pari materia in order to ascertain the overall legislative intent.

When construing a particular part of a statute it is only when the language being construed in and of itself is of doubtful meaning or doubt as to its meaning is engendered by apparent inconsistency with other parts of the same or a closely related statute that any matter extrinsic the statute may be considered by the Court in arriving at the meaning of the language employed by the Legislature.

Fla. State Racing Comm’n v. McLaughlin, 102 So. 2d 574, 575-76 (Fla. 1958)(emphasis omitted) (quoting lower court’s order).

Section 45.032 is “closely related” to section 45.031. Id. at 576. The two sections are manifestly designed to work in tandem. Not only was section 45.032 created in the same legislation in 2006 that added the statutory language at issue to section 45.031, but that legislation also amended section 45.031 to create two separate cross-references to section 45.032 and other related sections of chapter 45, including a cross-reference in the specific context of foreclosure surpluses. See § 45.031(7)(d), Fla. Stat. The two statutory provisions are without doubt part of the same statutory scheme—that is, they are in pari materia, “in the same matter.”

So looking to section 45.032 to understand the meaning of section 45.031 is proper because section 45.031, section 45.032, and several other sections of chapter 45 together comprise a statutory scheme relating to judicial foreclosure sale procedures. See Sch. Bd. of Palm Beach Cty. v. Survivors Charter Sch., Inc.,3 So. 3d 1220, 1234 (Fla. 2009) (“[B]ecause we are dealing with an entire statutory scheme for granting and terminating charters, we do not look at only one portion of the statute in isolation but we review the entire statute to determine intent.”). In the end, looking to section 45.032 “is in accord with the principle that we `give full effect to all statutory provisions and construe related statutory provisions in harmony with one another.'” Id. (quoting Heart of Adoptions, Inc. v. J.A., 963 So. 2d 189, 199 (Fla. 2007)). A harmonization of section 45.031 and section 45.032 leads to the conclusion that the sixty-day period for the filing of claims to surplus funds begins upon the issuance of the certificate of disbursements—that is, after the sale has been confirmed through the issuance of the certificate of title, and after the actual surplus amount has been determined. See §§ 45.031(6), 45.032(1)(c), Fla. Stat. We thus disagree with Glenville‘s conclusion that the only reasonable interpretation of “60 days after the sale” as used in section 45.031 is that it means sixty days from the public auction.

Our case law has already recognized that the term “sale” in chapter 45 must be understood in light of the specific context in which it is used. In Strasser we examined a previous version of section 45.031 and concluded that the undefined term “sale” in the specific context there referred to the transfer of ownership occurring upon the filing of the certificate of title. See Strasser, 286 So. 2d at 202-03. The point established in Strasser is underlined by the fact that the term “sale” is undefined not just in section 45.031 but in all of chapter 45, and there are other related instances in chapter 45 in which the term cannot be understood to mean the public auction itself. For example, section 45.0315, which addresses the right of redemption, provides that certain persons “may cure the mortgagor’s indebtedness and prevent a foreclosure sale” “[a]t any time before the later of the filing of a certificate of sale by the clerk of the court or the time specified in the judgment, order, or decree of foreclosure.” (Emphasis added.) In other words, a “sale” can still be “prevent[ed]” even after the public auction.

Interpretation of the sixty-day provision of section 45.031(7)(b) in light of the sixty-day provision of section 45.032(3) is also supported by the rule that “a specific statute covering a particular subject area always controls over a statute covering the same and other subjects in more general terms.” McKendry v. State, 641 So. 2d 45, 46 (Fla. 1994). Section 45.031 is clearly the more general statute. Section 45.031 is generally titled “Judicial sales procedure” and covers far more than foreclosure surpluses. Section 45.032, on the other hand, is specifically titled “Disbursement of surplus funds after judicial sale” and solely addresses foreclosure surpluses. Indeed, the very definition of the term “surplus” is found in section 45.032. Under this Court’s longstanding approach to statutory interpretation, section 45.032(3) controls the relevant sixty-day period.

Our reasoning regarding the conflict issue also requires that we disapprove the reasoning of Straub. Straub correctly determined that the sixty-day cutoff period does not begin until after the actual transfer of ownership of the property, but Straub erroneously concluded that the sixty-day period begins upon the issuance of the certificate of title. Although the Legislature may have contemplated that the certificate of disbursements would be issued on the same day as the certificate of title, see § 45.031(7)(a), Fla. Stat. (requiring the clerk to file the certificate of disbursements “[o]n filing a certificate of title”), that will not always be the case, as Glenville demonstrates. And section 45.032(3) provides that the actual triggering event is the issuance of the certificate of disbursements.

III. CONCLUSION

We conclude that “60 days after the sale,” as used in chapter 45 in the context of claims to surplus funds, means sixty days after the clerk issues the certificate of disbursements. Mellon’s claim to the surplus was timely filed before the expiration of that sixty-day period. Accordingly, we quash the Second District’s decision in Glenville. And we disapprove the reasoning of Straub, which is inconsistent with our reasoning here.

It is so ordered.

PARIENTE, QUINCE, POLSTON, LABARGA, and LAWSON, JJ., concur. LEWIS, J., concurs in result.

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

[1] We note that during the most recent legislative session, the Legislature passed Committee Substitute for Committee Substitute for House Bill 1361. Among other things, the bill amends sections 45.031 and 45.032, as well as certain related sections of the Florida Statutes, to revise (lengthen) the time period within which subordinate lienholders and other persons must file a claim to the surplus amount. The bill, which provides for an effective date of July 1, 2019, was signed by Governor Scott on March 21, 2018. See ch. 2018-71, Laws of Fla. We do not address this legislation.

[2] The trial court’s order reflects a surplus of $90,564.93, as opposed to the $86,093.27 surplus amount reflected in the certificate of disbursements. The actual amount of the surplus is not relevant to the legal issue presented in this case.

[3] The Second District also rejected Mellon’s reliance on certain cases that involved “a mortgagor’s right of redemption, which is governed by section 45.0315, not section 45.031.” Glenville, 215 So. 3d at 1287.

[4] Section 45.0315, which addresses the right of redemption, is the only cross-referenced section that was in existence before the effective date of the 2006 act.

[5] “Surplus trustees” are third-party trustees who must be approved by the Department of Financial Services and whose primary duty “is to locate the owner of record within 1 year after appointment.” See§ 45.034(1), (6), Fla. Stat.

 

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NEVADA SANDCASTLES, LLC, Appellant,
v.
THE BANK OF NEW YORK MELLON, F/K/A THE BANK OF NEW YORK AS TRUSTEE FOR THE BENEFIT OF THE CERTIFICATEHOLDERS OF THE CWALT TRUST, INC. ALTERNATIVE LOAN TRUST 2004-18CB MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2004-18CB, Respondent.

No. 74522.Supreme Court of Nevada.Filed September 13, 2018.Before: Cherry, Parraguirre and Stiglich, JJ.

ORDER OF REVERSAL AND REMAND

This is an appeal from a district court summary judgment, certified as final under NRCP 54(b), in an action to quiet title to real property.^[1] Eighth Judicial District Court, Clark County; Stefany Miley, Judge. Reviewing the summary judgment de novo, Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005), we reverse and remand.

The district court set aside the foreclosure sale after concluding that the sale did not substantially comply with the foreclosure statutes in light of respondent not being mailed the notice of default. However, this court has held that substantial compliance requires only that a party (1) have actual knowledge, and (2) not suffer prejudice. Hardy Cos., Inc. v. SNMARK, LLC, 126 Nev. 528, 536, 245 P.3d 1149, 1155 (2010). Here, it is undisputed that respondent had actual knowledge of the foreclosure sale because it received the notice of sale. And although there was some discussion at the summary judgment hearing regarding respondent being prejudiced by not receiving the notice of default, there is no evidence in the record that respondent was actually prejudiced. See Nev. Ass’n Servs., Inc. v. Eighth Judicial Dist. Court, 130 Nev. 949, 957, 338 P.3d 1250, 1255 (2014) (recognizing that “[a]rguments of counsel are not evidence and do not establish the facts of the case” (internal quotation and alteration omitted)). Accordingly, based on the record before it, the district court erred in setting aside the foreclosure sale.^[2] See W. Sunset 2050 Tr. v. Nationstar Mortg., LLC, 134 Nev., Adv. Op. 47, 420 P.3d 1032, 1035 (2018) (concluding that failure to mail the notice of default did not warrant setting aside a foreclosure sale when the deed of trust beneficiary failed to show prejudice).

Because reversal is warranted on this ground alone, we decline to address respondent’s alternative arguments on appeal that, if the sale was valid, it was a subpriority-only sale. We note, however, that this court has recently addressed similar arguments. See Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev., Adv. Op. 91, 405 P.3d 641, 650 (2017); First Horizon Home Loans v. The Entrust Grp., Inc., Docket No. 72995 (July 20, 2018, Order of Affirmance); Nationstar Mortg., LLC v. Melvin Grp., LLC, Docket No. 71028 (July 20, 2018, Order of Affirmance); HSBC Bank, USA, N.A. v. SFR Invs. Pool 1, LLC,Docket No. 71211 (December 14, 2017, Order of Affirmance). Consistent with the foregoing, we

ORDER the judgment of the district court REVERSED AND REMAND this matter to the district court for proceedings consistent with this order.

[1] Pursuant to NRAP 34(f)(1), we have determined that oral argument is not warranted in this appeal.

[2] In the absence of prejudice, respondent likewise would not have been entitled to equitable relief if the district court had analyzed the sale under the “fraud, unfairness, or oppression” standard. See Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev., Adv. Op. 91, 405 P.3d 641, 647-49 (2017) (discussing cases and reaffirming that inadequate price alone is insufficient to set aside a foreclosure sale absent “fraud, unfairness, or oppression”).

 

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H/T Dubin Law Offices

Lexology-

On July 13, the Superior Court of New Jersey Appellate Division reversed a trial court’s decision, ruling that a deceased homeowner’s family (defendants) had provided sufficient evidence to show that a division of a national bank (lender) had knowingly engaged in predatory lending practices when it approved a fraudulent mortgage application in violation of the New Jersey Consumer Fraud Act (Act). According to the opinion, in 2007 when the now deceased homeowner purchased a house, the lender may have been complicit in creating and approving a fraudulent loan application that, among other things, stated falsely that (i) the homeowner was a small business owner with a monthly income of $30,000 rather than $1,500, and (ii) the down payment came from the homeowner, when it supposedly came from a second mortgage offered to him from the same lender.

[LEXOLOGY]

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-0249-16T2

THE BANK OF NEW YORK MELLON
f/k/a THE BANK OF NEW YORK,
AS TRUSTEE FOR THE
CERTIFICATEHOLDERS OF THE
CWALT, INC., ALTERNATIVE
LOAN TRUST 2007-24 MORTGAGE
PASS-THROUGH CERTIFICATES,
SERVICES 2007-24,

              Plaintiff-Respondent,

v.

JOHN KINGSBURY, his heirs,
devisees and personal
representatives and his, her, or
any of their successors in right,
title, and interest; GLENN MICHAEL
KINGSBURY; MRS. GLENN MICHAEL
KINGSBURY, his wife; MRS. JOHN
KINGSBURY, his wife; SUSAN E.
KINGSBURY, n/k/a SUSAN E. DANSON,

                 Defendants-Appellants,

and

STATE OF NEW JERSEY; UNITED STATES
OF AMERICA,

            Defendants.
____________________________________________

              Argued May 1, 2018 – Decided July 13, 2018
          Before Judges Hoffman and Mitterhoff.

          On appeal from Superior Court New Jersey,
          Chancery Division, Ocean County, Docket No.
          F-012351-15.

          Mark G. Schwartz argued the cause for
          appellants (Cooper Levenson, PA, attorneys;
          Howard E. Drucks and Jennifer B. Swift, on the
          briefs).

          Eugene R. Mariano      argued the cause for
          respondent (Parker     McCay, PA, attorneys;
          Eugene R. Mariano,     of counsel and on the
          brief).

PER CURIAM

     In   this   mortgage   foreclosure   action,   defendant     Glenn

Kingsbury1 appeals from an August 5, 2016 final judgment entered

by the Chancery Division, following the court's grant of summary

judgment in favor of plaintiff, The Bank of New York Mellon, on

April 29, 2016.2 On appeal, defendant challenges the trial court's




1 On February 5, 2012, the mortgagor, John Kingsbury (decedent),
passed away.   On June 22, 2012, the Atlantic County Surrogate
issued Letters Testamentary to defendant, decedent's son,
confirming his appointment and qualification as executor of his
father's estate. For ease of reference, we refer to John Kingsbury
as decedent and his son, Glenn Kingsbury, as defendant.
2
   The notice of appeal refers only to the August 5, 2016 final
judgment.   However, defendant's Appellate Division Civil Case
Information Statement identifies the underlying summary judgment
order as the order he seeks to appeal. Both parties have fully
briefed the court's decision granting summary judgment. In the
interest of justice, we deem the appeal properly taken from the
summary judgment order.

                                  2                             A-0249-16T2
rejection of his claim that decedent was the victim of predatory

lending, in violation of the New Jersey Consumer Fraud Act (CFA),


N.J.S.A. 56:8-1 to -210.          For the following reasons, we reverse

and remand.

                                      I

       On March 20, 2007, decedent, then seventy-two years old,

executed a Real Estate Contract (Contract) for the purchase of a

beachfront home in Beach Haven.        The Contract provided for a sale

price of $1,775,000, a deposit of $1000, an additional deposit of

$126,500 within ten days of the signing of the Contract, and a

contingency of buyer obtaining a mortgage of $1,597,500.                   The

Contract did not reference a second mortgage.

       The record indicates the closing for the purchase took place

on June 8, 2007.       On that date, decedent executed an Interest Only

Fixed Rate Note (Note) in favor of Countrywide Home Loans, Inc.

(Countrywide) for $1,420,000, along with a corresponding mortgage.

The Note provided for a thirty-year term, with monthly payments

of $9319 for the first 120 months and $11,767 thereafter. Decedent

also   executed    a    Uniform   Residential   Loan    Application     (Loan

Application) on the same day. The Loan Application states decedent

was the self-employed owner of Cheer Tech for ten years and two

months and had a monthly income of $30,000, composed of a base

income of $25,000 and a pension of $5000.              It further listed a

                                      3                               A-0249-16T2
contract    sales    price    of   $1,775,000,    subordinate      financing      of

$177,500,    earnest    money      of   $177,500,    and   a    loan   amount     of

$1,420,000.     Also on June 8, 2007, decedent executed a HUD-1

Uniform    Settlement       Statement,    which   listed    earnest      money    of

$177,500, a principal loan amount of $1,420,000, and a second

mortgage of $177,050.

     Plaintiff's file regarding decedent's loan contained two

additional documents.        First was an April 30, 2007 letter decedent

allegedly    wrote    "to    explain     inquiries   on    my   credit   report";

apparently, "[d]ue to the size of the mortgage," decedent had

contacted other lenders.           Decedent also allegedly wrote, "I am

retired," but "bought into the business Cheer Tech in 1997 . . . ."

Second was a May 14, 2007 letter from an employee of H&R Block

stating, decedent "has filed as owner of Cheer Tech . . . since

1997.   I have been preparing his taxes for the last twelve years."

     On September 1, 2010, decedent stopped making the monthly

mortgage payments, constituting a default that he never cured.                    On

June 1, 2011, Mortgage Electronic Registration Systems, Inc., as

nominee for Countrywide, assigned the mortgage to plaintiff.                      As

noted, decedent passed away on February 5, 2012.                 A title search




                                          4                                A-0249-16T2
revealed a second mortgage for $177,5003 in favor of Countrywide

that was discharged on September 26, 2012.

     On August 22, 2014, plaintiff sent a notice of intent to

foreclose    to    decedent's   estate.      Plaintiff   filed      an   amended

foreclosure complaint on June 30, 2015 against decedent's estate

and heirs.    Defendant answered on September 9, 2015, alleging the

CFA barred plaintiff's claims due to Countrywide's fraudulent

actions, including material misrepresentation of decedent's income

on the loan application.

     On February 18, 2016, plaintiff filed a motion for summary

judgment.     On April 27, 2016, defendant filed opposition to

plaintiff's       motion,   arguing   the   court   should   hold    plaintiff

responsible for Countrywide's fraudulent actions in issuing the

loan.   Defendant also asserted plaintiff frustrated his right to

conduct meaningful discovery.

     On April 29, 2016, the trial court heard oral argument on

plaintiff's motion for summary judgment.              The court initially

noted that plaintiff is not a holder in due course because the

assignment of the note and mortgage to plaintiff occurred after

the loan went into default; as a result, plaintiff is "subject to


3
    We assume this second mortgage represents the same second
mortgage reflected on the settlement sheet, which lists a second
mortgage of $177,050. This discrepancy constitutes another issue
for the parties to address when they complete discovery.

                                       5                                 A-0249-16T2
the defenses that are relevant."        Plaintiff's counsel did not

dispute this point.      Defendant requested further discovery and

argued Countrywide defrauded decedent.        Plaintiff argued it met

the standard for summary judgment because decedent signed all of

the loan documents and defendant failed to establish fraud or

other wrongful conduct by Countrywide.

     The motion court found plaintiff established a prima facie

right to foreclose, concluding defendant failed to raise any

genuine issues of material fact.        The court specifically found

defendant's fraud claim "untenable."         The court also noted the

statute of limitations barred defendant from asserting a fraud

claim.   Furthermore, the court found decedent's failure to raise

a fraud claim at the time of the transaction, and the loan payments

he made for the next three years, ratified the note and mortgage.

The court further found the opposing certification of defendant

"unpersuasive,"   dismissing      it    as    "clearly   hearsay     and

speculation."     The    court   then   granted   plaintiff's   motion,

concluding defendant had "not met [his] burden for opposing . . .

summary judgment . . . ."

     On appeal, defendant argues the motion court erred in failing

to allow discovery, and in denying "the right to seek equitable

remedies."   We agree.



                                   6                            A-0249-16T2
                                    II

       We review a grant of summary judgment de novo, applying the

same standard as the trial court.         Henry v. N.J. Dep't of Human

Servs., 
204 N.J. 320, 330 (2010). Summary judgment must be granted

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 challenged

and that the moving party is entitled to a judgment or order as a

matter   of   law."     R.   4:46-2(c).    Without   making   credibility

determinations, the court considers the evidence "in the light

most favorable to the non-moving party" and determines whether it

would be "sufficient to permit a rational factfinder to resolve

the alleged disputed issue in favor of the non-moving party."

Brill v. Guardian Life Ins. Co. of Am., 
142 N.J. 520, 540 (1995).

       The CFA authorizes a suit by "[a]ny person who suffers any

ascertainable loss of moneys or property, real or personal, as a

result of the use or employment by another person of any method,

act,   or   practice   declared   unlawful   under   this   act   . . . ."


N.J.S.A. 56:8-19.      Thus, "[t]o prevail on a CFA claim, a plaintiff

must establish three elements: '1) unlawful conduct by defendant;

2) an ascertainable loss by plaintiff; and 3) a causal relationship

between the unlawful conduct and the ascertainable loss.'"           Zaman



                                     7                             A-0249-16T2
v. Felton, 
219 N.J. 199, 222 (2014) (quoting Bosland v. Warnock

Dodge, Inc., 
197 N.J. 543, 557 (2009)).

       The CFA defines an "unlawful practice" as "any unconscionable

commercial    practice,    deception,   fraud,   false   pretense,     false

promise,     misrepresentation,    or    the     knowing,   concealment,

suppression, or omission of any material fact with intent that

others rely upon such concealment, suppression or omission, in

connection with the sale or advertisement of any merchandise or

real   estate   . . . ."     
N.J.S.A.   56:8-2.     An   "unconscionable

commercial practice" suggests a standard of conduct lacking in

"good faith, honesty in fact and observance of fair dealing."             Cox

v. Sears Roebuck & Co., 
138 N.J. 2, 18 (1994) (quoting Kugler v.

Romain, 
58 N.J. 522, 544 (1971)).

       Predatory lending may constitute unconscionable commercial

practice under the CFA.      See Assocs. Home Equity Servs., Inc. v.

Troup, 
343 N.J. Super. 254, 278-79 (App. Div. 2001).           Predatory

lending is:

            a mismatch between the needs and capacity of
            the borrower . . . .    In essence, the loan
            does not fit the borrower, either because the
            borrower's underlying needs for the loan are
            not being met or the terms of the loan are so
            disadvantageous to that particular borrower
            that there is little likelihood that the
            borrower has the capability to repay the loan.




                                    8                                A-0249-16T2
             [Nowosleska v. Steele, 
400 N.J. Super. 297,
             305 (App. Div. 2008) (alteration in original)
             (quoting Troup, 
343 N.J. Super. at 267).]

       Here, whether decedent's loan application contained material

false information, and if so, Countrywide's complicity in creating

and approving such a fraudulent application, constitute material

facts in dispute.        Defendant contends: decedent never owned or

worked     for   Cheer   Tech,     rather     defendant   owns   the   business;

decedent's monthly income at the time of loan origination was

approximately       $1500,   not   $30,000;     the   April   30,   2007    letter

regarding decedent's credit report contains a forged signature;4

and H&R Block never filed Cheer Tech's tax returns.                    Defendant

submitted a certification attesting to those facts.                 Viewed in the

light most favorable to defendant, those facts clearly establish

a material dispute as to whether Countrywide engaged in unlawful

conduct proscribed by the CFA.              See Brill, 
142 N.J. at 540.           We

discern no basis for the motion court's rejection of defendant's

certification as "clearly hearsay and speculation."

       Furthermore, defendant contends Countrywide misrepresented

decedent as providing earnest money, when the money actually came

from   a   second    mortgage      from   Countrywide;    inexplicably,        this



4
    The signature on the April 30, 2007 letter does appear
substantially different from the signature on the Note, the
mortgage, the Loan Application, and the Settlement Statement.

                                          9                                A-0249-16T2
mortgage was discharged shortly after decedent's death.                         We also

question whether the loan application decedent allegedly signed

on the date of settlement was the same application he signed when

he applied for the loan.             The application signed on the date of

closing listed as an asset his "DOWNPAYMENT" of $177,500, but did

not list any liabilities, except for an unpaid credit card balance

of $29.     Since Countrywide provided almost the entire amount of

the down payment via a second mortgage, it obviously knew the

application submitted to decedent at closing contained material

false    information.        Allowing      defendant       to   complete       discovery

should yield a full explanation of the facts and circumstances

surrounding the second mortgage, its discharge, and the degree of

Countrywide's      involvement        in    the    creation     or    submission        of

falsified documents.

      Accordingly, we find the trial court erred when it determined

the     record   showed   no    material          facts    in   dispute        regarding

Countrywide's      conduct     and    whether      it     engaged    in   an   unlawful

practice in violation of the CFA.               We therefore reverse the grant

of summary judgment and remand to allow the parties to complete

discovery.       Because the court entered its final judgment based

upon the order granting summary judgment, we also vacate the final

judgment.



                                           10                                    A-0249-16T2
                                III

     The trial court also found the statute of limitations bars

defendant's   CFA   defense.   However,   we   find   the   doctrine    of

equitable recoupment saves the defense.

     We agree the statute of limitations bars defendant from

pursuing an action under the CFA.     The statute of limitations for

the CFA is six years.   
N.J.S.A. 2A:14-1; Trinity Church v. Lawson-

Bell, 
394 N.J. Super. 159, 170 (App. Div. 2007) (citing Mirra v.

Holland Am. Line, 
331 N.J. Super. 86, 90-91 (App. Div. 2000)).

Decedent signed the note and mortgage on June 8, 2007.         Assuming

decedent knew of the fraud at that time, the statute of limitations

began to run.   Defendant asserted a claim of fraud in his answer

to plaintiff's complaint on September 9, 2015, more than eight

years after the loan origination.     However, defendant asserted the

claim as a defense, not as a counterclaim.            The doctrine of

equitable recoupment permits a defendant to assert an otherwise

stale claim and     avoid the statute of limitations, where the

defendant uses the claim as a shield instead of a sword.          Nester

v. O'Donnell, 
301 N.J. Super. 198, 208 (App. Div. 1997) (citing

Midlantic Nat'l Bank v. Georgian Ltd., 
233 N.J. Super. 621, 625

(Law Div. 1989)).

     A defendant may raise an equitable recoupment defense in

order to reduce the plaintiff's recovery in a foreclosure action

                                11                               A-0249-16T2
when the defendant claims fraud arising from the loan origination.

Troup, 
343 N.J. Super. at 271 (citing Beneficial Fin. Co. of Atl.

City v. Swaggerty, 
86 N.J. 602, 611 (1981)).             "[J]udges invented

the doctrine of equitable recoupment in order to avoid an unusually

harsh or egregious result from a strict application of a statute

of limitations."     Ibid. (quoting Georgian Ltd., 
233 N.J. Super.

at 625-26). Therefore, "the defense of recoupment 'is never barred

by the statute of limitations so long as the main action itself

is timely.'"     Ibid. (quoting Nester, 
301 N.J. Super. at 208).

     Here,   plaintiff   argues     the   statute   of    limitations     bars

defendant's CFA defense.      However, a strict application of the

statute of limitations on the CFA defense would result in a gross

injustice if Countrywide engaged in unlawful practices to defraud

decedent during the loan process. We note the equitable recoupment

defense does not invalidate the debt; it merely reduces the amount

of plaintiff's recovery.      Id. at 272.     While plaintiff may still

be entitled to foreclose, equitable recoupment may limit the

recovery to the amount of the foreclosure sale and preclude any

deficiency judgment against defendant.           We remand to the trial

court to allow the parties to complete discovery and determine an

equitable result.

     Reversed,     vacated,   and    remanded.      We     do   not    retain

jurisdiction.

                                    12                                A-0249-16T2

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Katherine Radosevich, Appellant,
v.
The Bank of New York Mellon, Appellee.

Case No. 3D16-1880.District Court of Appeal of Florida, Third District.Opinion filed April 4, 2018.An Appeal from the Circuit Court for Miami-Dade County, Lower Tribunal No. 09-48177, Monica Gordo, Judge.

Legal Save, and Jeffrey H. Papell, for appellant.

McGlinchey Stafford, PLLC, and Karin L. Posser, N. Mark New, II and William L. Grimsley, (Jacksonville), for appellee.

Before EMAS, FERNANDEZ and LUCK, JJ.

EMAS, J.

INTRODUCTION

Katherine Radosevich appeals from the trial court’s order denying her motion for trial-level attorney’s fees as the “prevailing party” in the mortgage foreclosure action below. For the reasons that follow, we reverse and remand for the trial court to conduct a further hearing, as may be appropriate, to determine whether Radosevich remains entitled to an award of attorney’s fees as the prevailing party.

FACTS AND BACKGROUND

On June 25, 2009, the Bank of New York Mellon, etc. (“BONY”) filed a two-count complaint against Radosevich, seeking (1) to foreclose on a note and mortgage; and (2) to reclaim a lost note. Attached to the complaint was a copy of a unendorsed note, naming Countrywide Home Loans, Inc. as the lender. More than a year after the complaint was filed, BONY filed another copy of the original note, which this time contained an undated blank endorsement, along with an assignment dated July 21, 2009, but with an effective date of May 19, 2009.

The case proceeded to non-jury trial on May 7, 2013. The court denied BONY’s request to admit the loan payment history, based upon a determination that BONY’s witness was not credible. After BONY rested its case, counsel for Radosevich^[1] moved for involuntary dismissal, arguing there were discrepancies in the copy of the note filed with the complaint and the later-filed copy of the note, and that the mortgage assignment was dated after the complaint was filed. The trial court granted the motion, and entered an order of dismissal. The court later denied BONY’s motion for reconsideration or new trial, and BONY appealed the dismissal order to this court (Case No. 3D13-2280).

In the meantime, Radosevich moved for trial court attorney’s fees and costs as the prevailing party, pursuant to section 57.105(7), Florida Statutes^[2] and a prevailing party provision in the note and mortgage. While the appeal of the dismissal order was still pending, an agreed order was entered below on Radosevich’s motion for trial court attorney’s fees and costs, which stated:

1. Defendant’s Amended Motion for Attorney’s Fees and Costs is GRANTED as to entitlement pending the outcome of the appeal.

2. The parties are in agreement that no hearing regarding the amount of attorney’s fees shall be heard until the appeal has been resolved.

Following the completion of briefing in the appeal of the dismissal order, BONY filed a notice of voluntary dismissal, which was recognized by this court.^[3]Thereafter, this court, in an unelaborated order, denied Radosevich’s motion for appellate fees and costs.

Back in the trial court, Radosevich sought a hearing to determine the reasonable amount of trial-level attorney’s fees she should be awarded, pursuant to the court’s earlier order granting entitlement. BONY objected, and the trial court held a non-evidentiary hearing on the issue. At the hearing, BONY argued that Radosevich’s entitlement to fees and costs had not yet been established because the trial court’s prior order granted entitlement “pending the outcome of the appeal,” and, because the appeal had been voluntarily dismissed due to a short sale, neither party was a “prevailing party” entitled to an award of fees and costs.

The trial court denied Radosevich’s entitlement to fees and costs, determining that “the clear and unambiguous language in the Entitlement Order . . . requires the Court to consider and make a determination as to the outcome of the Appeal,” and thus, under the case of Kelly v. BankUnited FSB, 159 So. 3d 403 (Fla. 4th DCA 2015), “the outcome of the Appeal was a voluntary dismissal of the Appeal by Plaintiff after the closing of a short sale,” and “Papell is not entitled to an award of trial court attorney’s fees and costs.” This appeal followed.

ANALYSIS

We generally review an order on a motion for attorney’s fees for an abuse of discretion. Lopez v. Dep’t of Rev., 201 So. 3d 119 (Fla. 3d DCA 2015). However, “[w]here entitlement rests on the interpretation of a statute or contract, our review is de novo.” Raza v. Deutsche Bank Nat. Trust Co., 100 So. 3d 121, 123 (Fla. 2d DCA 2012). See also, Kelly, 159 So. 3d at 405.

Radosevich argues on appeal that the trial court erred in determining she was not the prevailing party in the trial court because she did prevail below and nothing that happened on appeal, including BONY’s voluntary dismissal of its appeal, altered her status as prevailing party below.^[4]

In Moritz v. Hoyt Enterprises, Inc., 604 So. 2d 807, 810 (Fla. 1992), the Florida Supreme Court held that “the fairest test to determine who is the prevailing party is to allow the trial judge to determine from the record which party has in fact prevailed on the significant issues tried before the court.”

In the case before us, the trial court, relying on Kelly, 159 So. 3d at 407,determined that Radosevich was not entitled to an award of fees and costs because, despite its voluntary dismissal of the appeal, “[BONY] received considerable proceeds in exchange for the satisfaction of the underlying mortgage and note and Radosevich lost her home and received no proceeds from the sale.”

In Kelly, our sister court considered a case which similarly involved a foreclosure, final judgment, an appeal, and a subsequent voluntary dismissal by the bank following a short sale. In that case, the Fourth District held that the trial court did not abuse its discretion in determining that the property owner was not entitled to attorney’s fees under section 57.105(7) because, under the “unique circumstances” of the case, “neither party substantially prevailed.” Id. at 404.

As the trial court acknowledged in its order denying Radosevich’s entitlement, there are some procedural differences between this case and Kelly: for example, in Kelly, unlike here, the bank prevailed below (and obtained a final judgment) in the trial court, and following the short sale, voluntarily dismissed the lower court case (not the appeal); further, in Kelly there was no entitlement order entered by the trial court prior to the bank’s voluntary dismissal. By contrast, in our case, Radosevich was the prevailing party below, and the trial court had already entered an entitlement order while BONY’s appeal of the involuntary dismissal order was pending on appeal.

However, we cannot ignore the point made by BONY that, regardless of Radosevich’s status as the prevailing party below, post-judgment actions or events arguably altered that status, permitting the trial court to determine whether such actions or events require reconsideration of its interlocutory entitlement order and Radosevich’s status as the prevailing party. As the Florida Supreme Court held in Moritz, 604 So. 2d at 810, the party that prevailed for purposes of entitlement to attorney’s fees is “the party prevailing on the significant issues in the litigation.” Thus, where litigation ultimately ends in a proverbial “tie,” with each party prevailing in part and losing in part on the significant issues in the litigation, a trial court may properly determine that neither party has prevailed for purposes of entitlement to attorney’s fees. Loy v. Loy, 904 So. 2d 482, 484 (Fla. 3d DCA 2005). And while we acknowledge the general rule that “when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party,” Thornber v. City of Fort Walton Beach, 568 So. 2d 914, 919 (Fla. 1990), a court may, under appropriate circumstances, look beyond a voluntary dismissal and consider other facts of the litigation in determining whether a party is the prevailing party for purposes of entitlement to attorney’s fees. Padow v. Knollwood Club Ass’n, Inc., 839 So. 2d 744, 745 (Fla. 4th DCA 2003). Courts should “look to the substance of litigation outcomes—not just procedural maneuvers—in determining the issue of which party has prevailed in an action.” Tubbs v. Mechanik Nuccio Hearne & Wester, P.A., 125 So. 3d 1034, 1041 (Fla. 2d DCA 2013). In the instant case, the trial court was permitted to consider whether, upon return of this cause to the trial court following BONY’s voluntary dismissal of its appeal, Radosevich remained the prevailing party at the trial level, such that she was still entitled to an award of attorney’s fees.

Nonetheless, while we hold that the trial court had the authority to reconsider its earlier entitlement order, and to consider whether actions and events occurring during the pendency of the prior appeal affected that earlier determination, the fact remains that the court must make such a determination based upon the record before it, Moritz, 604 So. 2d at 810, and in this case, the record was simply inadequate for the trial court to make such a determination. In reaching its conclusion that Radosevich was no longer a prevailing party, the trial court relied upon the “fact” that a short sale took place on the foreclosed property. However, the trial court took no testimony and received no evidence regarding the existence, terms or effect of a purported short sale. Mere representations and argument of counsel do not constitute evidence. Geralds v. State, 111 So. 3d 778, 795 n.16 (Fla. 2010) (quoting Collins Fruit Co. v. Giglio, 184 So. 2d 447, 449 (Fla. 2d DCA 1966)) (noting “it is axiomatic that the arguments of counsel are not evidence.”); State v. T.A., 528 So. 2d 974 (Fla. 2d DCA 1988).

CONCLUSION

We reverse and remand for the trial court to conduct a further hearing, as may be appropriate, to determine whether Radosevich remains entitled to an award of attorney’s fees as the prevailing party, and for further proceedings consistent with this opinion.

Not final until disposition of timely filed motion for rehearing.

[1] Radosevich was represented throughout the foreclosure proceedings below, and on appeal, by attorney Jeffrey H. Papell, with whom she had entered into a representation agreement. That agreement provided that Papell’s firm “may seek attorney’s fees from Plaintiff under applicable law should Client prevail or the case is dismissed.” Under the terms of this agreement, Radosevich also confirmed that she had “been told and agree that I cannot waive, settle, resolve, assign or otherwise transfer or dispose of the Firms’ claim for attorney’s fees and costs and that I have assigned and transferred to [the Firm] any right I may have to recover unpaid attorney’s fees and costs.”

[2] Section 57.105(7) provides: “If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.” Thus, “[t]he statute makes a unilateral contract clause for attorney’s fees bilateral in effect.” Mihalyi v. LaSalle Bank, N.A., 162 So. 3d 113, 115 (Fla. 4th DCA 2014). It is undisputed in this case that the mortgage contract provided for an award of attorney’s fees to BONY in the event it prevailed in a foreclosure action against Radosevich. Thus, pursuant to section 57.105(7), Radosevich would also be entitled to her attorney’s fees in the event that she is determined to be the prevailing party.

[3] There are no settlement or other supporting documents in the record before us, and according to Papell, if any such settlement occurred, it was done without any notice to Papell. In its notice of voluntary dismissal, BONY represented that it had approved a short sale of Radosevich’s property.

[4] We disagree with Radosevich that the trial court was without jurisdiction to reconsider its earlier order determining entitlement to fees. The entitlement order was an interlocutory order, determining only entitlement, and not the amount of reasonable fees to be awarded, and thus, the trial court had jurisdiction to reconsider, and alter, its earlier order. See Mills v. Martinez, 909 So. 2d 340 (Fla. 5th DCA 2005).

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Lexology-

Reversing the rulings of both the appellate and the trial courts, the Supreme Court of the State of Illinois recently held that the deadline to file a motion to quash service under the Illinois Mortgage Foreclosure Law (IMFL) did not run while the foreclosure action was dismissed for want of prosecution.

A copy of the opinion is available at:  Link to Opinion.

The plaintiff mortgagee filed a residential mortgage foreclosure complaint against, among others, the borrower and a limited liability company. The mortgagee filed an affidavit of service by publication indicating that, after a due diligence search, it was unable to locate or serve the company.  Thereafter, the company was served by publication.

[LEXOLOGY]

2018 IL 121995

THE BANK OF NEW YORK MELLON, Appellee,
v.
MARK E. LASKOWSKI et al., (Pacific Realty Group, LLC, Appellant).

No. 121995.Supreme Court of Illinois.

Opinion filed January 19, 2018.JUSTICE THOMAS delivered the judgment of the court, with opinion.

Chief Justice Karmeier and Justices Freeman, Kilbride, Garman, Burke, and Theis concurred in the judgment and opinion.

OPINION

JUSTICE THOMAS delivered the judgment of the court, with opinion.

¶ 1 The issue we must decide is whether Pacific Realty Group, LLC, timely filed its motion to quash service. We hold that it did.

¶ 2 BACKGROUND

¶ 3 On June 11, 2010, in its capacity as the trustee for certain certificate holders of an alternative loan trust, the Bank of New York Mellon (the Bank) filed a residential mortgage foreclosure complaint against Mark Laskowski, Pacific Realty Group, LLC (Pacific), and others in Will County circuit court. In July 2010, the Bank filed an affidavit for service by publication stating that, after a due diligence search, it was unable to locate or serve Pacific. The Bank’s search included both directory assistance records and the Illinois Secretary of State’s business registration records. After service by publication was made, Pacific failed to appear or otherwise respond to the complaint. In July 2012, the trial court entered an order of default and a judgment of foreclosure. In the judgment, the trial court made a specific finding that service of process was properly made as to Pacific. In February 2013, the subject property was sold at a sheriff’s sale.

¶ 4 In April 2013, the Bank filed a motion requesting an order approving the report of the sale of the property and the proposed distribution of the proceeds, as well as an order of possession. The motion was noticed up for April 18, 2013, and on that date Pacific’s attorney showed up for the first time and filed an appearance. However, because the Bank failed to appear, the trial court on its own motion dismissed the Bank’s case for want of prosecution (DWP). Shortly thereafter, the Bank moved to vacate the DWP. On May 30, 2013, the trial court granted the Bank’s motion and reinstated the case.

¶ 5 On July 18, 2013, Pacific filed a motion to quash service of process. The motion alleged that Pacific is a foreign LLC registered in New Mexico and that it does not have a registered agent in Illinois. According to Pacific, this means that service by publication was improper because section 1-50 of the Limited Liability Company Act (805 ILCS 180/1-50 (West 2010)) does not allow an unregistered foreign LLC to be served in that manner. In May 2014, the trial court denied Pacific’s motion. In doing so, the trial court first found that the motion was untimely because it was filed more than 60 days after Pacific filed its appearance in the case. See 735 ILCS 5/15-1505.6(a) (West 2012). The trial court also denied the motion on the merits, holding that service by publication was proper. The trial court subsequently entered an order approving the report of the sheriff’s sale and the proposed distribution of the proceeds.

¶ 6 Pacific appealed, and a divided appellate court affirmed the trial court’s decision denying Pacific’s motion. 2017 IL App (3d) 140566. On appeal, Pacific argued both that its motion to quash service was timely and that it should have been granted on the merits. The appellate court majority began with the timeliness question, citing section 15-1505.6(a) of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1505.6(a) (West 2012)). In relevant part, that section states that, “unless extended by the court for good cause shown,” the deadline for filing a motion to quash service in a residential foreclosure case is “60 days after *** the date that the moving party filed an appearance.” Id. § 15-1505.6(a)(i). The majority explained that, although Pacific filed its appearance on April 18, 2013, it did not file its motion to quash service until July 18, 2013, which was nearly 90 days later. 2017 IL App (3d) 140566, ¶ 16. As importantly, Pacific did not seek or obtain an extension of the 60-day deadline “for good cause,” as section 15-1505.6(a) allows. Id. Consequently, the majority held, Pacific’s motion to quash was clearly untimely, and the trial court was correct to deny it as such. Id. As a final matter, the majority stated that, because it affirmed the trial court’s finding that Pacific’s motion was untimely, it “need not address *** whether the service by publication on Pacific in this case was proper.” Id. ¶ 17.

¶ 7 Justice Holdridge dissented. His position was that, under the principles announced by this court in Case v. Galesburg Cottage Hospital, 227 Ill. 2d 207 (2007), “the 60-day deadline for contesting service could not have applied” while the case was DWP. 2017 IL App (3d) 140566, ¶ 23 (Holdridge, J., dissenting). Rather, that deadline began to run only when the case was reinstated, which occurred on May 30, 2013. Id. Pacific’s motion to quash therefore was timely, as it was filed 49 days later, on July 18, 2013. Id.

¶ 8 We granted Pacific’s petition for leave to appeal (Ill. S. Ct. R. 315 (eff. Mar. 15, 2016)).

¶ 9 DISCUSSION

¶ 10 In this court, Pacific raises the same two arguments that it raised in the appellate court below. First, Pacific argues that its motion to quash service was timely. Second, Pacific argues that its motion to quash service should have been granted because service by publication was improper in this case. We will begin with the timeliness question.

¶ 11 Timeliness

¶ 12 Pacific’s timeliness argument raises a question of statutory interpretation, and the principles governing such inquiries are familiar and well settled. The cardinal rule of statutory construction is to ascertain and give effect to the legislature’s intent. People v. Johnson, 2017 IL 120310, ¶ 15. The most reliable indicator of legislative intent is the language of the statute, given its plain and ordinary meaning. Id. That said, a court also will presume that the legislature did not intend absurd, inconvenient, or unjust results. Id. Consequently, where a plain or literal reading of a statute renders such results, the literal reading should yield. Id. The construction of a statute is a question of law that we review de novo. Id.

¶ 13 The statute at issue is section 15-1505.6(a) of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1505.6(a) (West 2012)). In relevant part, that section provides that:

“In any residential foreclosure action, the deadline for filing a motion to *** quash service of process *** unless extended by the court for good cause shown, is 60 days after the earlier of these events: (i) the date that the moving party filed an appearance; or (ii) the date that the moving party participated in a hearing without filing an appearance.” Id.

Here, it is undisputed that Pacific filed its motion to quash service on July 18, 2013, which was approximately 90 days after it filed its appearance. The question for us is whether the 60-day statutory clock continued to run while the Bank’s case was DWP. Pacific insists that it did not because, as long as the case was DWP, there was neither reason nor opportunity for Pacific to file a motion to quash service. In support, and like the dissent below, Pacific relies principally upon this court’s decision in Case. The Bank, by contrast, argues that section 15-1505.6(a) is “clear and unambiguous” in stating that, unless extended by the court for good cause, the deadline for filing a motion to quash service in a residential foreclosure action is 60 days after the moving party files its appearance. Here, the court did not extend the 60-day deadline, and Pacific filed its motion approximately 90 days after filing its appearance. Thus, the Bank argues, there is no question that Pacific’s motion was untimely, and this court does not have to look any further than the plain language of the statute to reach this obvious conclusion.

¶ 14 For two reasons, we agree with Pacific. To begin with, the plain language of section 15-1505.6(a) supports the conclusion that the 60-day clock is tolled while the underlying case is DWP. In relevant part, section 15-1505.6(a) states that, “[i]n any residential foreclosure action,” the deadline for filing a motion to quash service of process is 60 days after the moving party files its appearance. Id. The key phrase here is “[i]n any residential foreclosure action,” because that phrase expressly defines the setting in which the passage of time will be measured. Needless to say, 60 days cannot pass in a residential foreclosure action if no such action is pending. Nor can a party comply with the statutory filing deadline in the absence of an active case, even if it wanted to. Thus, to suggest that Pacific was still on the clock even when the Bank’s case was DWP is to suggest the impossible, both conceptually and practically. The legislature’s use of the phrase “[i]n any residential foreclosure action” clearly reflects this reality, and we therefore reject the Bank’s contention that the 60-day deadline was unaffected by the dismissal of the Bank’s case.

¶ 15 As Pacific correctly points out, this conclusion finds solid support in our decision in Case. In Case, the plaintiffs filed a negligence complaint on April 25, 2003. Case, 227 Ill. 2d at 209. A month later, on May 20, 2003, the plaintiffs voluntarily dismissed that complaint pursuant to section 2-1009 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1009 (West 2006)). Case, 227 Ill. 2d at 210. Almost one year later, on April 12, 2004, the plaintiffs refiled their complaint pursuant to section 13-217 of the Code (735 ILCS 5/13-217 (West 2006)). Case,227 Ill. 2d at 210. Section 13-217 provides that, where a plaintiff voluntarily dismisses a timely filed complaint, that plaintiff has either one year or the remaining limitations period, whichever is greater, to refile the action. By April 26, 2004, the plaintiffs had obtained service of process on all of the defendants. Id.The defendants later filed a motion to dismiss under Illinois Supreme Court Rule 103(b) (eff. July 1, 1997), arguing that the plaintiffs had failed to exercise reasonable diligence in obtaining service of process. Case, 227 Ill. 2d at 211. After a hearing, the trial court held that the plaintiffs had violated Rule 103(b), in that it took the plaintiffs almost one year after the initial filing to obtain service on the defendants, despite the fact the defendants were all local health care providers with readily ascertained locations. Id. Accordingly, the trial court dismissed the plaintiffs’ case with prejudice. Id.

¶ 16 In reversing the trial court’s decision, this court explained that “the pendency of an action that a defendant argues is delayed is central to any determination of whether a passage of time should be considered for purposes of Rule 103(b).” Id.at 217. Further, the court explained that

“[t]he requirement of a pending action against which to measure diligence is rooted in simple logic. If an action is dismissed, and not pending, there is no reason to serve a defendant with process. As such, there is nothing to delay, and nothing to be diligent about.” Id.

Accordingly, the court concluded by holding that “the time that elapses between the dismissal of a plaintiff’s complaint and its refiling pursuant to section 13-217 is not to be considered by a court when ruling on a motion to dismiss for violation of Rule 103(b).” Id. at 222.

¶ 17 The same logic that controlled Case controls here. Again, before 60 days can pass “[i]n any residential foreclosure action,” such an action necessarily must be pending. And unless such an action is pending, there is neither cause nor occasion to file a motion contesting the plaintiff’s service of process. Accordingly, we hold that the time that elapses between the DWP of a residential mortgage foreclosure action and its subsequent reinstatement is not to be counted in determining whether a motion to quash service is timely under section 15-1505.6(a).

¶ 18 Our second reason for agreeing with Pacific is rooted in the principle that, in construing the language of a statute, courts will presume that the legislature did not intend absurd, inconvenient, or unjust results. Pacific’s reading of section 15-1505.6(a) yields no such results. On the contrary, Pacific’s reading yields an entirely sensible and workable result, by which the statutory time period for filing a motion to quash service in a residential foreclosure action runs as long as the case is pending and ceases to run as long as the case is not pending. By contrast, the Bank’s reading of section 15-1505.6(a) yields results that are at once absurd, inconvenient, and unjust. The absurdity lies in the prospect of section 15-1505.6(a)’s 60-day filing period not only running but also expiring while the underlying case is DWP, which is what would have happened here had the order vacating the DWP come just two weeks later than it did. The inconvenience comes in mandating the noticing up and filing of a motion to quash service in a case that’s been dismissed, a procedural maneuver so unprecedented that the Bank’s own counsel concedes “there’s no way to definitively know” how it could be done. Finally, the injustice would come in holding that a residential foreclosure defendant is bound by a statutory filing deadline with which it is legally impossible to comply, which is exactly what we would be saying if we endorsed the Bank’s reading of section 15-1505.6(a) and held that the 60-day clock continues to run even while the action is dismissed. For all of these reasons, we emphatically reject the Bank’s reading of section 15-1505.6(a) in favor of that advocated by Pacific and compelled by the clear statutory language, given its plain and ordinary meaning.

¶ 19 The only question that remains on this point is whether Pacific’s motion to quash service was in fact timely. We hold that it was. Again, section 15-1505.6(a) provides that, in any residential foreclosure action, the deadline for filing a motion to quash service of process is “60 days after *** the date that the moving party filed an appearance.” 735 ILCS 5/15-1505.6(a)(i) (West 2012). And under our holding above, the time that elapses between the DWP of a residential mortgage foreclosure action and its subsequent reinstatement is not to be counted in calculating the statutory deadline. Here, Pacific filed its appearance on April 18, 2013, which was the same date that the trial court dismissed the Bank’s case for want of prosecution. This means that, once the DWP was vacated and the Bank’s case reinstated, Pacific had 60 days to file its motion to quash service. The trial court’s order vacating the DWP and reinstating the Bank’s case was entered on May 30, 2013, and Pacific filed its motion 49 days later, on July 18, 2013. This was well within the statutory deadline, and we therefore hold that Pacific’s motion to quash service was timely.

¶ 20 Service by Publication

¶ 21 Pacific’s other argument is that the trial court should have granted its motion to quash service because service by publication was legally improper in this case. As discussed above, because it agreed with the trial court’s conclusion that Pacific’s motion to quash service was untimely, the appellate court below did not reach the question of whether service by publication was proper. We therefore remand this case to the appellate court for the consideration of that question in the first instance.

¶ 22 CONCLUSION

¶ 23 For the foregoing reasons, we reverse the appellate court’s judgment affirming the trial court’s decision finding that Pacific’s motion to quash service was untimely, and we remand this cause to the appellate court for consideration of whether service by publication was proper in this case.

¶ 24 Appellate court judgment reversed.

¶ 25 Cause remanded.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

FREDERICK SABIDO and JONELLE SABIDO, Appellants,
v.
THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, SUCCESSOR TO JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR CWALT, INC., ALTERNATIVE LOAN TRUST 2007-J1, L’HERMITAGE COMMUNITY ASSOCIATION, INC., and CITIBANK, N.A., Appellees.

No. 4D16-2944.District Court of Appeal of Florida, Fourth District.

December 20, 2017.Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Barry Stone, Senior Judge; L.T. Case No. CACE 14-008945.

Roy D. Oppenheim, Geoffrey E. Sherman, Jacquelyn Trask, and Yanina Zilberman of Oppenheim Pilelsky, P.A., Weston, for appellants.

Elliot B. Kula, W. Aaron Daniel, and William D. Mueller of Kula & Associates, P.A., Miami, for appellee, The Bank of New York Mellon.

PER CURIAM.

This is a foreclosure case complicated by multiple transfers of the mortgage and note and by the fact that the original note was lost. The complexity of the case caused the trial to extend over four days between February and June, 2016. Because the appellee Bank^[1] failed to comply with the requirements of the lost note statute, we reverse the final judgment of foreclosure.

The plaintiff in a foreclosure case “must tender the original promissory note to the trial court or seek to reestablish the lost note under section 673.3091, Florida Statutes.” Servedio v. U.S. Bank Nat. Ass’n, 46 So. 3d 1105, 1107 (Fla. 4th DCA 2010). Here, because the Bank did not tender the original promissory note, it could not enforce the note unless it reestablished the note pursuant to the lost note statute.

Section 673.3091(1), Florida Statutes (2016) provides:

(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.

Thus, subsection 673.3091(1)(a) required that the Bank prove one of two things, that it either

1. “was entitled to enforce the instrument when loss of possession occurred,”

or

2. “has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.”

The Bank did not know when the note was lost, so it could not establish that it was entitled to enforce the instrument when loss of possession occurred. See Peters v. Bank of New York Mellon, 227 So. 3d 175, 179 (Fla. 2d DCA 2017). Under the Uniform Commercial Code, the term “person entitled to enforce” an instrument means

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a holder; or

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to s. 673.3091 or s. 673.4181(4).

§ 673.3011, Fla. Stat. (2016).

Here, the original lender was Washington Mutual Bank. Because the note was not indorsed, later transferees were not entitled to enforce it as holders. § 671.201(21)(a), Fla. Stat. (2016). The Bank was then required to comply with the second option in section 673.3091(1)(a) set forth above—the Bank had to establish the chain of transactions leading to its acquisition of ownership, so that it could show that it “acquired ownership” from a person “entitled to enforce the instrument when loss of possession occurred.”

A party seeking to reestablish a lost note may meet the statutory requirements “either through a lost note affidavit or by testimony from a person with knowledge.” Home Outlet, LLC v. U.S. Bank Nat’l Ass’n, 194 So. 3d 1075, 1078 (Fla. 5th DCA 2016).

The only affidavit placed into evidence was the affidavit from an employee of Chase (the entity that took over servicing in 2012). “If the party relies on a lost-note affidavit, the affidavit must establish that whoever lost the note “was entitled to enforce it when the loss of possession occurred; the loss of the note was not the result of a transfer or lawful seizure; and [the bank] cannot reasonably obtain possession of the note because of the loss.”” Id. (quoting Figueroa v. Federal National Mortgage Ass’n, 180 So. 3d 1110, 1114 (Fla. 5th DCA 2015)). The lost note affidavit placed into evidence in this case contained this language:

6. Upon information and belief, the loss of possession is not the result of the original note being canceled or transferred to by the party seeking to enforce the note.

(emphasis added). In addition, the affidavit was admitted for the sole purpose of establishing that Chase searched its own business records. The affidavit made no reference to “whoever lost the note,” did not state that any of the putative transferees, Countrywide, CWALT, Inc., or the Bank, were ever entitled to enforce the note, and did not state unequivocally that the note was not lost as the result of transfer or lawful seizure. In short, the affidavit fell short of the statutory requirements for reestablishing a lost note.

While a lost note may also be reestablished by testimony from a person with knowledge, the Bank’s witness was an employee of Chase — a servicer that took over in 2012. By that time, the note had theoretically changed hands three times. The witness did not establish that Countrywide or CWALT were ever entitled to enforce the note.

It was not necessary for the Bank to establish “exactly when, how, and by whom the note was lost.” Boumarate v. HSBC Bank USA, N.A., 172 So. 3d 535, 537 (Fla. 5th DCA 2015). The plaintiff was required, however, to prove that it “acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.” § 673.3091(1)(a). As in Beaumont v. Bank of New York Mellon, 81 So. 3d 553, 555 (Fla. 5th DCA 2012), the Bank “offered no proof of anyone’s right to enforce the note when it was lost.” See also Wells Fargo Bank, N.A. v. Robinson, 168 So. 3d 1279, 1279 (Fla. 5th DCA 2015)(finding reversible error in admitting a copy of the note into evidence where “Wells Fargo failed to prove who lost the note, when it was lost, and who had the right to enforce the note when it was lost. Wells Fargo also failed to produce any evidence of ownership at the time of the loss.”).

Because of a failure of proof under the lost note statute, we reverse and remand for dismissal.

GROSS, MAY and KLINGENSMITH, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] According to the answer brief, the appellee is “The Bank of New York Mellon f/k/a The Bank of New York, Successor to JP Morgan Chase Bank, National Association, as Trustee for CWalt, Inc., Alternative Loan Trust 2007-J1.”

 

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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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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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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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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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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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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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