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TFH 6/23 | The 68 Mostly Under Used Affirmative Defenses That Can Save Your Home From Foreclosure And You And Your Family From Eviction

TFH 6/23 | The 68 Mostly Under Used Affirmative Defenses That Can Save Your Home From Foreclosure And You And Your Family From Eviction

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Sunday – June 23, 2019

The 68 Mostly Under Used Affirmative Defenses That Can Save Your Home From Foreclosure And You And Your Family From Eviction

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The importance of defensive pleadings is often overlooked by homeowners in foreclosure and by foreclosure defense attorneys.

In court, Pleadings consist of Plaintiff’s Complaint, the Defendant’s Answer including Affirmative Defenses, any Defendant’s Counterclaims and Defendant’s Cross-Claims against other Defendants and any Defendant’s Third-Party Complaints, and opposing Answers and Replies.

Today we concentrate on the many Affirmative Defenses that can be included in Defendant’s Answer that in individual foreclosure cases may be available to homeowners sued for foreclosure.

Affirmative Defenses are those sets of facts not contained in the Complaint that if proven will either diminish or completely block the foreclosure relief requested by the Plaintiff in the Complaint.

The pleading rules in different jurisdictions importantly differ, especially in federal courts which have abandoned “notice pleading” in favor of more detail demanding “plausibility pleading” requirements. Determine which pleading rules apply to your case.

However, in most but not all federal district courts, Affirmative Defenses are still governed by notice pleading standards, which means that in most state courts and in most federal district courts a homeowner need only to list by name without elaborating on his or her Affirmative Defenses.

All Affirmative Defenses relied upon by homeowner Defendants will need to be proven however in court during the duration of a foreclosure case, and generally Defendants have the burden of proof regarding Affirmative Defenses, which moreover if not plead in the Answer are generally considered waived.

Also, courts have the discretion generally to consider Affirmative Defenses as Counterclaims and Counterclaims as Affirmative Defenses despite how they may be formally labeled, and the burden of proof regarding some Affirmative Defenses is placed on the Plaintiff and not on the Defendant by statute or by caselaw, depending on the jurisdiction.

For all of the above reasons, it is important for homeowners sued for foreclosure or for eviction following a nonjudicial foreclosure to prepare their defense well in advance and to be as specific and as complete in their defensive pleadings.

That means that a foreclosure Defendant must carefully determine based on his or her facts which Affirmative Defenses fit his or her facts and can be proven perhaps with the aid of discovery before listing them in his or her Answer.

Several of the Affirmative Defenses overlap in their defensive scope, the better procedure being in such situations to list all that apply notwithstanding potential duplication.

Third-Party Complaints and how they might improve chances of defeating foreclosures will be the topic of a future Foreclosure Hour.

Listed before are at least 68 Affirmative Defenses available in most jurisdictions in defense against foreclosure, discussed, time permitting, on this Sunday’s radio broadcast.

1. Statute of limitations

2. Standing

3. Breach of contract

4. Promissory estoppel

5. Adhesion

6. Mutual mistake

7. Unilateral mistake

8. Breach of covenant of good faith and fair dealing

9. Unfair and deceptive acts and practices

10. Unconscionability

11. Illegality

12. In pari delecto

13. Breach of fiduciary duty

14. Unclean hands

15. Equitable estoppel

16. Coercion

17. Duress

18. Usury

19. Fraud

20. Fraud in the factum

21. Intentional misrepresentation

22. Negligent misrepresentation

23. Fraudulent concealment

24. Anticipatory breach and repudiation

25. Securities fraud

26. Unjust enrichment

27. Recoupment

28. Offset

29. Setoff

30. Failure of consideration

31. Force majeure

32. Merger doctrine

33. Restraint of trade

34. Improper venue

35. Lack of subject matter jurisdiction

36. Lack of personal jurisdiction

37. Parole evidence rule

38. Payment

39. Insufficiency of service of process

40. Release

41. Novation

42. Res judicata

43. Collateral estoppel

44. Undue influence

45. Discharge in bankruptcy

46. Lack of capacity

47. Lack of exhaustion of administrative remedies

48. Splitting of causes of action

49. Lack of consideration

50. Accord and satisfaction

51. Failure to mitigate damages

52. Lack of necessary parties

53. Lack of indispensable parties

54. Absence of contractual conditions precedent

55. Statute of frauds

56. Laches

57. Impossibility of performance

58. Waiver

59. Marital status discrimination

60. Truth in Lending Act (TILA) violations

61. Home Ownership and Equity Protection Act (HOEPA) violations

62. Racketeering Influenced and Corrupt Organizations Act (RICO) violations

63. Fair Debt Collection Practices Act (FDCPA) violations

64. Real Estate Settlement Procedures Act ( RESPA) violations

65. Home Equity Conversion Mortgage (HECM) violations

66. Attorney abandonment

67. Failure to state a claim upon which relief can be granted

68. All other affirmative defenses listed in all other pleadings in the case

Please join John and me this Sunday to learn, time permitting, about these largely overlooked foreclosure affirmative defenses, each of which can be further researched by our listeners by surfing the Internet.

The list of 68 Affirmative Defenses will be posted on our website www.foreclosurehour.com with the audio recording of this Sunday’s show shortly after this Sunday’s radio broadcast, heard live in Honolulu on KHVH-AM News Radio at 3:00 p.m., and heard live on the iHeart Radio App on the Internet at 6:00 p.m. Pacific Time and 9:00 p.m. Eastern Time (the audio of the live broadcast repeats on the IHeart Radio App immediately following the live broadcast).

Gary

———————

GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813
Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733
Email: gdubin@dubinlaw.net.

Host: Gary Dubin Co-Host: John Waihee

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Submit questions to info@foreclosurehour.com

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

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Wilmington Savings Fund Society v. Akehi | HAWAII ICA – DUBIN LAW OFFICES HAS BEAT THE POPE!!!

Wilmington Savings Fund Society v. Akehi | HAWAII ICA – DUBIN LAW OFFICES HAS BEAT THE POPE!!!

CAAP-18-0000477sdo by DinSFLA on Scribd

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Posted in STOP FORECLOSURE FRAUD0 Comments

Second Department Demonstrates Limitations to Distressed Real Estate Investors Litigating Foreclosures

Second Department Demonstrates Limitations to Distressed Real Estate Investors Litigating Foreclosures

Law-

A new development in real estate acquisitions from distressed homeowners involves investors approaching homeowners in foreclosure and offering to purchase the deed from the owner/mortgagor. After purchasing the deeds, investors have then chosen to litigate with the foreclosing banks on the merits of the mortgage in the hopes of settling for a lesser amount than the amount due or having the case dismissed which may result in the accelerated debt deemed time barred and the mortgage unenforceable. A recent decision in the Appellate Division, Second Department, Citimortgage v. Etienne, 2019 NY Slip Op 03564 (2d Dep’t 2019) shows the limits of the ability of a subsequent owner attempting to assert defenses personal to the original owner/mortgagor in a pending foreclosure proceeding. The decision is instructive to remind practitioners regarding “personal defenses” and standing of other parties to appeal decisions.

In Etienne, the borrower executed a promissory note in favor of the bank in 2009 which was secured by a mortgage against a property in Kings County. Default occurred in 2010. In November 2012, the borrower transferred title to the subject property to the defendant OKL Property Corp. The bank filed a foreclosure against the borrower and OKL in 2012. The borrower filed an answer denying the allegation in the complaint and asserted several defenses, including lack of standing and failure to comply with the notice requirements in RPAPL 1304. OKL filed an answer asserting that it was the record owner of the premises and asserted that the plaintiff lacked standing to commence the action as their second affirmative defense. Etienne, at 1 and 2.

The plaintiff moved for summary judgment and an order of reference. The former owner and borrower on the note, Etienne, did not oppose the plaintiff’s motion. The subsequent owner, OKL, opposed the plaintiff’s motion and cross-moved for summary judgment dismissing the complaint on the grounds that the plaintiff lacked standing to commence the proceeding as well as that plaintiff failed to comply with the notice requirements of RPAPL 1304. In an order issued in May 2016, the court granted the plaintiff’s motion for summary judgment and an order of reference and denied OKL’s cross motion. OKL appealed the judgment. Etienne, at 2.

[LAW.COM]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Nonjudicial Foreclosure Not Regulated by the FDCPA

Nonjudicial Foreclosure Not Regulated by the FDCPA

JD Supra-

On March 20, 2019, the U.S. Supreme Court ruled unanimously in Obduskey v. McCarthy & Holthus LLP, 17-1307, 2019 WL 1264579 (U.S. Mar. 20, 2019), that nonjudicial foreclosure is not subject to regulation under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (the “FDCPA”).

The FDCPA applies to a “debt collector,” which is defined in section 1692a(6) as any person or entity who “regularly collects or attempts to collect, directly or indirectly, debts owed . . . or due another.” Section 1692a(6) provides that the “term [debt collector] also includes any person who uses [the mail or interstate commerce] in any business the principal purpose of which is the enforcement of security interests.”

Another section of the FDCPA, section 1692f(6), governs the conduct of a debt collector in repossessing property nonjudicially. Although section 1692f(6) applies to nonjudicial foreclosure, it does not impose all of the FDCPA’s regulations on those who merely enforce security interests. Instead, section 1692f(6) prohibits only certain activities, such as threatening to repossess without any intention of actually doing so, or in cases when the party threatening to repossess has no right to do so.

In Obduskey, a lender retained a law firm to conduct a nonjudicial foreclosure on Colorado residential property after the homeowner defaulted on the mortgage secured by the property. In response to the foreclosure notice, the homeowner attempted to invoke rights under section 1692h, which obligates a debt collector to “cease collection” activities until it provides the debtor with a “verification of the debt.” The law firm proceeded with the nonjudicial foreclosure and the homeowner sued in federal court, claiming that the law firm failed to comply with the FDCPA’s verification procedure. The district court dismissed the complaint on the ground that the law firm was not a debt collector within the meaning of the FDCPA. The U.S. Court of Appeals for the Tenth Circuit affirmed on appeal, holding that merely enforcing a security interest through nonjudicial foreclosure is not governed by the FDCPA.

[JDSUPRA]

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Deutsche Bank Faces Criminal Investigation for Potential Money-Laundering Lapses, Including Jared Kushner Linked Transactions

Deutsche Bank Faces Criminal Investigation for Potential Money-Laundering Lapses, Including Jared Kushner Linked Transactions

NYT-

Federal authorities are investigating whether Deutsche Bank complied with laws meant to stop money laundering and other crimes, the latest government examination of potential misconduct at one of the world’s largest and most troubled banks, according to seven people familiar with the inquiry.

The investigation includes a review of Deutsche Bank’s handling of so-called suspicious activity reports that its employees prepared about possibly problematic transactions, including some linked to President Trump’s son-in-law and senior adviser, Jared Kushner, according to people close to the bank and others familiar with the matter.

The criminal investigation into Deutsche Bank is one element of several separate but overlapping government examinations into how illicit funds flow through the American financial system, said five of the people, who were not authorized to speak publicly about the inquiries. Several other banks are also being investigated.

[NEW YORK TIMES]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Blair v. EMC MORTGAGE, LLC | Ind: Court of Appeals – EMC waited an unreasonable time to accelerate its Note and Mortgage. By doing so and by failing to make demand within a reasonable time, its rights are time-barred.

Blair v. EMC MORTGAGE, LLC | Ind: Court of Appeals – EMC waited an unreasonable time to accelerate its Note and Mortgage. By doing so and by failing to make demand within a reasonable time, its rights are time-barred.

 

Dean Blair and Paula Blair, Appellants/Cross-Appellees-Defendants/Counterclaimants,
v.
EMC Mortgage, LLC., Appellee/Cross-Appellant-Plaintiff/Counterclaim Defendant.

No. 18A-MF-808.
Court of Appeals of Indiana.
June 12, 2019.
Appeal from the Vanderburgh Superior Court Trial Court Cause No. 82D07-1207-MF-3333, The Honorable Richard G. D’Amour, Judge.

Robert R. Faulkner, Evansville, Indiana, Attorney for Appellants.

David J. Jurkiewicz, Nathan T. Danielson, Christina M. Bruno, Bose McKinney & Evans LLP, Indianapolis, Indiana, Attorneys for Appellee.

KIRSCH, Judge.

Dean and Paula Blair (“the Blairs”) appeal the trial court’s order that foreclosed their interest in two mortgaged properties and that entered a money judgment for EMC Mortgage, LLC (“EMC”). The Blairs raise eight issues, but we reach only one: whether the trial court erred in granting only partial relief to the Blairs on their statute-of-limitations defense.[1]

On cross appeal, EMC raises one issue: whether the trial court erred in not entering summary judgment for EMC where the Blairs’ request for more time to respond to EMC’s motion for summary judgment was not timely.

We reverse.

Facts and Procedural History

On December 21, 1992, the Blairs signed a promissory note in the principal amount of $110,300.00 in favor of United Companies Lending Corporation (“UCLC”) (“the Note”). Appellants’ App. Vol. 2 at 57-60. The Note contained an optional acceleration clause, which allowed UCLC to decide whether to accelerate the loan balance following a default. Id. at 58. The Note was secured by a mortgage (“the Mortgage”) on two properties, one at 916 Wortman Road, Evansville, Indiana and the other at 2237 Herbert Avenue, Evansville, Indiana. Id.at 62; Tr. Vol. II at 23-24. The Mortgage gave UCLC the option to accelerate the Mortgage upon default of the Note. Appellants’ App. Vol. 2 at 64-65. On November 17, 1993, the Blairs sued UCLC and its agent, John Ash (“Ash”), alleging breach of contract and various torts, including fraud and intentional infliction of emotional distress (“the Ash lawsuit”). Appellants’ App. Vol. 3 at 15-23, 95.

The monthly installment payment on the Note was $1,469.36. Tr. Vol. II at 48-49. After making regular payments on the Note for approximately two-and-one-half years, the Blairs defaulted, making their last payment on June 19, 1995. Id. at 35-36. On August 27, 1997, the Blairs filed a Chapter 13 bankruptcy case (“the Blair Bankruptcy”), which automatically stayed the Ash lawsuit. Appellants’ App. Vol. 3at 24. On December 16, 1997, the bankruptcy court lifted the bankruptcy stay as to UCLC, allowing it to proceed with its foreclosure action in state court. Id. at 24-25. On October 31, 1998, the trial court in the Ash lawsuit granted UCLC leave to file its counterclaim for foreclosure against the Blairs. Id. at 96.

UCLC filed for Chapter 11 bankruptcy on March 1, 1999 (“the UCLC bankruptcy”). Id. at 28; 96-97. On July 20, 2000, the Note and Mortgage were assigned to EMC. Appellants’ App. Vol. 2 at 67. About six weeks later, on September 23, 2000, the bankruptcy court entered an order approving an asset purchase agreement involving many of UCLC’s assets, including the Note and Mortgage in this case. Id.at 106-11. When EMC bought the Note and Mortgage on September 23, 2000, the Ash lawsuit and the Blair bankruptcy were still pending. Id. at 95-99. On October 2, 2003, the Blairs obtained their bankruptcy discharge. Appellants’ App. Vol. 3 at 78.

Meanwhile, Ash failed to appear in the Ash lawsuit to contest his liability, and on March 14, 2007, the Blairs obtained a default judgment against him for $300,000.00. Id. at 97-98, 126. Although it had purchased the Note from UCLC in 2000, EMC was never named as a defendant in the Ash lawsuit. Id. at 95-99. On June 19, 2007, six years after the Note and Mortgage were assigned to EMC, EMC recorded the assignments. Appellants’ App. Vol. 2 at 67.

On June 18, 2009, nearly six years after the Blairs received their bankruptcy discharge, EMC sought to reopen the Blairs’ bankruptcy by filing a “Complaint for Declaratory Judgment,” asking the bankruptcy court to clarify the extent, validity, and priority of EMC’s lien, as well as the impact of the Blairs’ partial bankruptcy discharge on EMC’s ability to collect the indebtedness due under the Note and Mortgage. Appellants’ App. Vol. 3 at 75.

On January 6, 2012, EMC and the Blairs filed a Joint Stipulation and Joint Motion to dismiss EMC’s Complaint for Declaratory Judgment, stipulating the following:

a. The lien provided for by the terms of the Mortgage survives and is unaffected by the Blair Bankruptcy;

b. The Note and Mortgage at issue herein were not discharged in the [Blair] Bankruptcy;

. . .

e. There has been no determination in the Blair Bankruptcy if EMC Mortgage is the true party in interest as it relates to the enforcement of the Note and Mortgage[.]

Id. at 84-85.

JPMorgan Chase Bank, N.A. (“Chase”) began servicing the loan for EMC on April 1, 2011, and, three days later sent the Blairs a default notice. Pl.’s Ex. 4 at 52. The notice gave the Blairs an opportunity to cure their loan defaults and informed them that the entire loan balance would be accelerated, and foreclosure proceedings would begin if the Blairs did not do so. Id. at 53.

On July 5, 2012, EMC filed its foreclosure lawsuit. Appellants’ App. Vol. 2 at 5, 50. EMC sought a personal judgment against the Blairs for the outstanding principal balance, interest, attorney fees, expenses, and costs and a judgment declaring that EMC’s Mortgage is a valid and enforceable first priority lien against the mortgaged properties. Id. at 52-53.

On September 27, 2012, the Blairs filed their answer to the complaint and raised affirmative defenses and counterclaims. The Blairs alleged that the assignment of the Note and Mortgage from the original lender, UCLC, to EMC was void because the assignment occurred almost two months before the bankruptcy court authorized the sale of UCLC’s assets to EMC:

According to Exhibit 1 to the EMC bankruptcy complaint, UCLC assigned the note and mortgage . . . almost two months prior to the date of the only order of the UCLC Delaware Bankruptcy Court which could have approved the transfer.

. . . .

Even if UCLC had ever been the real party in interest, its attempted transfer to EMC is void because, at the time it was made, it had not been authorized by the Delaware Bankruptcy Court.

Id. at 73, 75.

On May 1, 2014, EMC filed a motion for summary judgment on its complaint and the Blairs’ counterclaim with supporting designated evidence and supporting brief. Appellants’ App. Vol. 2 at 9; Appellee’s App. Vol. II at 3, 7, 29. Neither EMC’s motion for summary judgment, nor its supporting brief addressed the Blairs’ counterclaim that UCLC’s assignment of the Mortgage and the Note was void because it was made two months before the bankruptcy court approved the sale of UCLC’s assets to EMC. Appellee’s App. Vol. II at 7-28.

On June 4, 2014, the trial court made a docket entry indicating that the Blairs had failed to file a timely response to EMC’s motion for summary judgment and that summary judgment was granted to EMC. Appellants’ App. Vol. 2 at 9. On June 5, 2014, the Blairs filed a motion seeking additional time to respond to EMC’s May 1, 2014 summary judgment motion. Id. Despite previously indicating that EMC was granted summary judgment, the trial court, on June 5, 2014, granted the Blairs’ request for more time to respond to EMC’s motion for summary judgment. Id. at 10. On June 12, 2014, EMC tendered a proposed summary judgment order, but the trial court did not enter it. Id. On December 18, 2014, the Blairs filed their response to EMC’s motion for summary judgment and filed their own motion for summary judgment. Id. at 12. On the same day, the trial court gave leave to the Blairs to amend their answer by interlineation, allowing the Blairs to raise a statute-of-limitations defense. Id. at 12, 131. On January 27, 2016, the trial court denied both motions for summary judgment. Id. at 15.

On June 16, 2016, EMC filed an in rem motion for summary judgment, together with supporting designated evidence. Id. at 18. On August 18, 2016, the Blairs filed their (1) response to EMC’s in rem summary judgment motion, and (2) their own motion for summary judgment, together with a supporting designation of evidence. Id. at 19.

On October 6, 2016, the trial court entered an order holding that EMC’s complaint was barred by the applicable statute of limitations. Id. at 134-72. The order also denied the Blairs’ motion for summary judgment. On November 7, 2016, EMC filed a motion to correct error. Id. at 20. On February 3, 2017, the trial court granted the motion, thus reversing its ruling on the statute of limitations issue and setting the matter for trial. Id. at 21.

The trial court conducted a bench trial on January 2, 2018. Tr. Vol. II at 1. Albert Smith, Jr. (“Smith”), a mortgage banking research officer for Chase, was the sole witness to testify on behalf of EMC. Id. at 15-64; 119-22. Smith testified that as of December 7, 2017, the total payoff amount for the Note was $493,333.81. Id. at 34.

Smith also testified that EMC sought clarification about the status of the loan by filing a declaratory action in the Blair Bankruptcy case. Id. at 29. EMC filed that action on June 18, 2009, almost six years after the Blairs received their partial discharge in bankruptcy court. Appellants’ App. Vol. 3 at 75. Smith did not explain why EMC waited six years after the Blairs’ partial bankruptcy discharge to seek such clarification.

On March 7, 2018, the trial court issued its final order. The court granted partial relief to the Blairs on their statute of limitations defense. The court ruled that EMC’s July 5, 2012 complaint violated the ten-year statute of limitations in Indiana Code section 34-11-2-11 for installment payments and unpaid interest that accrued before July 3, 2002, and for the escrow payments that EMC advanced before July 3, 2002. Appellants’ App. Vol. 2 at 42. As to the Note, the court ruled that EMC’s complaint violated the six-year statute of limitations in Indiana Code section 34-11-2-9 for delinquent payments before July 3, 2006. Id. at 43.

To the degree that the trial court denied the Blairs’ statute-of-limitations defense, it rejected the Blairs’ claim that EMC did not invoke the acceleration clause in a reasonable time:

Indiana law is clear that “if an installment loan contract or promissory note has an optional acceleration clause, . . . a creditor may (but is not required) to declare all future installments on the loan immediately due and payable after a debtor’s default.” Smither v. Asset Acceptance, LLC, 919 N.E.2d 1153, 1160 (Ind. Ct. App. 2010). Furthermore, the Note in this case explicitly provides that, “Even if, at time a time which I [Borrower] am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have a right to do so if I am in default at a later time.” Note, ¶ 6(D).

. . . .

And while it is true that “`a party is not at liberty to stave off operation of the statute [of limitations] inordinately by failing to make demand,” Smither v. Asset Acceptance, LLC, 919 N.E.2d 1153, 1160 (Ind. Ct. App. 2010) (quoting Curry v. U.S. Small Bus. Admin., 679 F. Supp. 966, 969-70 (N.D. Cal. 1987), a person who fails to exercise an optional acceleration clause on an installment contract (where demand is not necessary to perfect a cause of action) is not “stav[ing] off operation of the statute of limitations . . .” Id. Rather, the statute of limitations begins to run on each individual installment as it becomes due, just as it would in any other installment contract absent acceleration.

Id. at 38-39.

The March 7, 2018 final order entered judgment for EMC on the Mortgage in the amount of $193,359.00 plus prejudgment and post-judgment interest, attorney fees, and costs and entered judgment on the Note for EMC in the amount of $76,758.00 plus prejudgment and post-judgment interest, plus attorney fees and costs. Id. at 45. It also foreclosed the Mortgage and ordered a sheriff’s sale for both the Herbert Avenue and Wortman Road properties. Id. The Blairs now appeal, and EMC cross-appeals.

Discussion and Decision

I. EMC’s Cross Appeal

We first address EMC’s cross appeal because it raises a potentially dispositive issue. EMC argues that the trial court should have abided by its June 4, 2014 entry, which entered summary judgment for EMC because the Blairs failed to file a timely request for more time to respond to EMC’s motion for summary judgment. EMC argues that, by allowing the case to proceed, the trial court violated a bright line rule that states that a trial court shall enter summary judgment for the movant when the non-movant fails to file a timely response or a timely request for more time to file a response. EMC concedes, however, that this bright line rule comes into play only when the movant has made a prima-facie showing that it is entitled to summary judgment. The Blairs respond that their request for more time to respond to EMC’s motion for summary judgment was timely because EMC served its motion to the wrong zip code and because the envelope in which EMC served its motion was post-marked five days later than the service date.

Pursuant to Rule 56(C) of the Indiana Rules of Trial Procedure, summary judgment is appropriate when there are no genuine issues of material fact and when the moving party is entitled to judgment as a matter of law. On review of a trial court’s decision to grant or deny summary judgment, this Court applies the same standard as the trial court. We must determine whether there is a genuine issue of material fact requiring trial, and whether the moving party is entitled to judgment as a matter of law. Neither the trial court nor the reviewing court may look beyond the evidence specifically designated to the trial court.

A party seeking summary judgment bears the burden to make prima facie showing that there are no genuine issues of material fact and that the party is entitled to judgment as a matter of law. Once the moving party satisfies this burden through evidence designated to the trial court pursuant to Trial Rule 56, the nonmoving party may not rest on its pleadings, but must designate specific facts demonstrating the existence of a genuine issue for trial.

Coffman v. PSI Energy, Inc., 815 N.E.2d 522, 526 (Ind. Ct. App. 2004) (emphasis added) (internal citations omitted). If the non-movant fails to meet its responsive burden, a trial court shall enter summary judgment. Sheehan Constr. Co. v. Cont’l Cas. Co., 938 N.E.2d 685, 689 (Ind. 2010). “[A] party who fails to bring an interlocutory appeal from the denial of a motion for summary judgment may nevertheless pursue appellate review after the entry of final judgment.” Keith v. Mendus, 661 N.E.2d 26, 35 (Ind. Ct. App. 1996).

After a summary judgment motion is filed, “[a]n adverse party shall have thirty (30) days after service of the motion to serve a response and any opposing affidavits.” Ind. Trial Rule 56(C). The trial court may alter the time limits set forth in Trial Rule 56 “[f]or cause found . . . upon motion made within the applicable time limit.” Ind. Trial Rule 56(I). When service is accomplished by mail, three calendar days are added to an adverse party’s response deadline. Ind. Trial Rule 6(E).

EMC is correct that courts have no discretion to alter the time limits of Trial Rule 56, and courts cannot consider summary judgment filings made after the expiration of the time limitations set forth in Trial Rule 56. See Borsuk v. Town of St. John,820 N.E.2d 118, 123 n.5 (Ind. 2005) (“When a nonmoving party fails to respond to a motion for summary judgment within 30 days by either filing a response [or] requesting a continuance . . ., the trial court cannot consider summary judgment filings of that party subsequent to the 30-day period.”); see also Desai v. Croy, 805 N.E.2d 844, 848-49 (Ind. Ct. App. 2004). Thus, EMC contends that, because the Blairs did not file a timely response and because it made a prima-facie showing in its motion for summary judgment, the trial court should have adhered to its June 4, 2014 entry that EMC was entitled to summary judgment.

Here, we find that EMC was not entitled to summary judgment because it failed to make a prima-facie showing that summary judgment was proper. EMC failed to make this showing both here on appeal and in its motion, supporting brief, and designated evidence filed in the trial court. On appeal, EMC asserts that it made a prima-facie showing in the trial court, but its appellate brief does not summarize the claims in its foreclosure complaint, describe the allegations in its motion for summary judgment, point to relevant designated evidence, or make a legal argument as to why it was entitled to judgment as a matter of law. EMC’s appellate brief also fails to discuss the Blairs’ affirmative defenses and counterclaims upon which EMC also sought summary judgment. As a result, EMC fails to satisfy its burden to make a cogent argument in support of its claim that the trial court should have entered summary judgment for EMC. Thus, EMC has waived this issue. See Basic v. Amouri, 58 N.E.3d 980, 984 (Ind. Ct. App. 2016).

Waiver notwithstanding, EMC’s motion for summary judgment, supporting brief, and designating materials did not establish a prima facie case that EMC was entitled to summary judgment. Its motion and supporting materials did not address the Blairs’ counterclaim that the assignment of Mortgage and Note from UCLC to EMC was void.

The Blairs’ counterclaim alleged:

According to Exhibit 1 to the EMC bankruptcy complaint, UCLC assigned the note and mortgage . . . almost two months prior to the date of the only order of the UCLC Delaware Bankruptcy Court which could have approved the transfer.

. . . .

Even if UCLC had ever been the real party in interest, its attempted transfer to EMC is void because, at the time it was made, it had not been authorized by the Delaware Bankruptcy Court.

Appellants’ App. Vol. 2 at 73, 75. Thus, because EMC did not make a prima-facie showing that it was entitled to summary judgment on the Blairs’ counterclaim, the burden did not shift to the Blairs to designate facts demonstrating the existence of a genuine issue for trial and to demonstrate that EMC was not entitled to judgment as a matter of law. See Coffman, 815 N.E.2d at 526. Hence, the question of whether the Blairs’ request for more time to respond to the motion for summary judgment was timely was irrelevant.

II. The Blairs’ Appeal

The trial court’s March 7, 2018 final order made specific findings of fact and conclusions thereon. In reviewing such an order, we apply a two-tiered standard of review, determining whether (1) the evidence supports the findings, and (2) the findings support the judgment. See Sullivan Builders & Design, Inc. v. Home Lumber of New Haven, Inc., 834 N.E.2d 129, 134 (Ind. Ct. App. 2005). We will set aside the trial court’s findings only if they are clearly erroneous. Id. A finding is clearly erroneous only if no facts in the record support the finding either directly or by inference. Id. We do not reweigh the evidence, and we consider the evidence most favorable to the judgment, drawing all reasonable inferences in favor of the judgment. Id. We need not defer to the trial court’s conclusions of law, however, and a judgment is clearly erroneous if it relies on an incorrect legal standard. See Freese v. Burns, 771 N.E.2d 697, 701 (Ind. Ct. App. 2002).

The Blairs argue that EMC’s foreclosure action is barred by the applicable statutes of limitations because EMC did not accelerate the Note and Mortgage within a reasonable time. The statute of limitations on a note is six years from the date that the cause of actions accrues, and the statute of limitations on a mortgage is ten years from the date the cause of action accrues. See Ind. Code § 34-11-2-9; Ind. Code § 34-11-2-11. The Blairs observe that EMC filed its 2012 foreclosure action approximately seventeen years after the Blairs made their last payment in 1995 and note that EMC filed its 2009 Complaint for Declaratory Judgment in the bankruptcy court to seek clarification about the status of the Note and Mortgage more than eleven years after UCLC was granted relief from the automatic stay issued in the Blair Bankruptcy.

The purpose of a statute of limitation is to encourage the prompt presentation of claims. Perryman v. Motorist Mut. Ins. Co., 846 N.E.2d 683, 689 (Ind. Ct. App. 2006). Statutes of limitation spare the courts from litigation of stale claims and prevent a person from defending a case after memories have faded, witnesses have died or disappeared, and evidence has been lost. Id.

Actions to enforce promissory notes “must be commenced within six (6) years after the cause of action accrues.” Ind. Code § 34-11-2-9. Actions to foreclose mortgages “must be commenced within ten (10) years after the cause of action accrues.” Ind. Code § 34-11-2-11. The determination of when a cause of action accrues is generally a question of law. Imbody v. Fifth Third Bank, 12 N.E.3d 943, 945 (Ind. Ct. App. 2014). Where, as here, an installment contract contains an optional acceleration clause, the statute of limitations to collect the entire debt does not begin to run immediately upon the debtor’s default. See Smither, 919 N.E.2d at 1160. Instead, the statute generally begins to run only when the creditor exercises its option to accelerate. Imbody, 12 N.E.3d at 945. If an installment loan contract or promissory note has an optional acceleration clause, a creditor may declare all future installments on the loan immediately due and payable upon the debtor’s default. Id. However, “a party is not at liberty to stave off operation of the statute [of limitations] inordinately by failing to make demand.” Smither, 919 N.E.2d at 1160. In such cases, the time for demand is a reasonable time and a matter of the parties’ expectations. Id.

We applied these principles in Heritage Acceptance Corp. v. Romine, 6 N.E.3d 460 (Ind. Ct. App. 2014). In 2005, Romine bought a used Pontiac Firebird from Royal Motors on an installment contract. Id. at 461. The contract stated that Heritage would be Royal Motors’ assignee. Id. The contract included an acceleration clause, which allowed Royal Motors to demand immediate payment of all remaining payments upon Romine’s default. Id. at 462. Romine defaulted, making his last payment in May of 2007. Id. Six years later, in April of 2013, Heritage invoked the acceleration clause and demanded that Romine pay the entire amount owned. Id.Romine could not pay, and Heritage sued Romine in small claims court. The trial court entered judgment for Romine because Heritage did not commence its action within the four-year statute of limitations set forth in Indiana Code section 26-1-2-725. Id. at 464. Our court affirmed, concluding that Heritage did not invoke the acceleration clause within a reasonable time:

Here, Heritage waited until early April 2013 to exercise its right to demand full payment under the optional acceleration clause. Romine had tendered his last payment almost six years earlier. . . . We conclude, as did the Court in Smither, that waiting after these events have occurred to exercise an optional acceleration clause is unreasonable. Thus, Heritage’s long-delayed attempt to exercise the acceleration clause did not prevent the four-year statute of limitations from taking effect, and its complaint is barred.

Id. at 464.

Heritage relied on Smither, 919 N.E.2d at 1153. Smither obtained a credit card from a bank and ran up a debt of $1,700.00 before he stopped making payments in February 2000. Id. The bank continued to send him monthly billing statements. Id. In December 2001, Asset Acceptance, LLC (“Asset”), bought the loan from the bank and in May of 2006, requested full payment of the debt under the contract’s optional acceleration clause and sued Smither. Id.

Asset prevailed on summary judgment, and Smither appealed. A panel of this court noted that the contract had an optional acceleration clause, but Asset did not exercise the clause until May 2006, by which time Smither had been in default for over six years and the statute of limitations had run. Id. at 1161. The court stated that “waiting until after the statute of limitations has passed following default before making demand for full and immediate payment of a debt is per se an unreasonable amount of time to invoke an optional acceleration clause and cannot be given effect.” Id. at 1161-62. The court also noted, “a party is not at liberty to stave off operation of the statute [of limitations] inordinately by failing to make demand.” Id. at 1161. Thus, Smither concluded that Asset’s long-delayed exercise of the acceleration clause did not prevent the statute of limitations from taking effect. Id. at 1162.

EMC attempts to distinguish Smither by arguing that it deals with significantly different facts, noting that the credit card account at issue in Smither was “more akin to an open account or unwritten contract than a promissory note or installment loan contract.” Appellee Br. at 36 (quoting Smither, 919 N.E.2d at 1161). Accordingly, EMC posits, Smither found it unclear whether it “ought to incorporate the law regarding optional acceleration clauses into this case.” Id. (quoting Smither, 919 N.E.2d at 1161).

We disagree with EMC’s contention that Smither does not apply here because a panel of this court recently applied Smither to a case involving a mortgage and promissory note, as does the case before us today. See Stroud v. Stone, No. 18A-CC-1722, 2019 WL 1496836 (Ind. Ct. App. Apr. 5, 2019). In Stroud, Stone on April 29, 2003, deeded two properties, including a mobile home park, to Heartland Homestead LLC (“HH LLC”). Id. at *2. Stroud was one of two partners in HH LLC. Id. Fifth Third Bank (“Fifth Third”) financed part of the purchase price and took a first mortgage on the properties. Id. Stone received cash at the closing and a $100,000.00 promissory note. Id. The promissory note contained an acceleration clause. Id. at *3. The promissory note was secured by an “Open-End” Mortgage, which, despite that designation, required the specified amount for installment payments of $833.33 per month beginning June 1, 2003 until the amount was paid in full by the maturity date of July 1, 2013. Id. Because the mobile home park was not as profitable as Stroud had hoped, he made his last payment in May of 2008, and Fifth Third filed a foreclosure action on October 31, 2008. Id. To avoid foreclosure, Stroud hatched a complicated scheme that would eventually result in creation of the Heartland Land Trust (“the Trust”), which would buy the properties from Fifth Third. Id. at *3-*6. Those efforts fell through, and on February 23, 2016, Stone initiated an action on the promissory note, suing Stroud, HH LLC, and the Trust for, inter alia, repayment of the promissory note. Id. at *14. In finding that Stone did not file suit within a reasonable time and that his action on the promissory note was time barred, the Stroud panel observed that Stone waited nearly eight years after Stroud had defaulted to demand payment, two years beyond the six-year statute of limitations under Indiana Code section 34-11-2-9. Id.This was a period the court found was “a per se unreasonable amount of time to wait before invoking an acceleration clause.” Id. (quoting Smither, 919 N.E.2d at 1161-62).

Guided by Stroud, we find that EMC delayed an unreasonable amount of time by waiting until April of 2011 to invoke the acceleration clause. Tr. Vol. II at 35-36. Sixteen years earlier, in June of 1995, the Blairs had defaulted. Pl.’s Ex. 4 at 52. In December of 1997, the bankruptcy court lifted the stay that had prevented UCLC from seeking foreclosure against the Blairs, and in August of 1998, the trial court in the Ash lawsuit had granted leave to UCLC to pursue a foreclosure action. Appellants’ App. Vol. 3 at 24-25, 96. The rights to the Note and the Mortgage were assigned to EMC in 2000. Appellants’ App. Vol. 2 at 67. At that time, EMC could have taken its first steps to pursue its rights under the Note and Mortgage, but it did not. Considering that the Blairs had defaulted five years earlier, this would have been the prudent course for EMC to have taken.

Even more puzzling is EMC’s decision to wait until June of 2009 to file its Complaint for Declaratory Judgment. Appellants’ App. Vol. 3 at 75. This was nearly six years after the Blairs received their bankruptcy discharge. Id. at 78. During his trial testimony on behalf of EMC, Smith did not explain why EMC waited six years to seek such clarification. On appeal, EMC likewise offers no explanation for this delay. EMC’s decision to wait six years after the Blairs received their partial bankruptcy discharge to seek clarification about the status of the Note and Mortgage was unreasonable, and this delay did not prevent the statutes of limitations from taking effect. See Heritage Acceptance Corp., 6 N.E.3d at 464. EMC waited an unreasonable time to accelerate its Note and Mortgage. By doing so and by failing to make demand within a reasonable time, its rights are time-barred. Smither, 919 N.E.2d at 1160.

Reversed.

Riley, J., and Robb, J., concur.

[1] To the extent that the trial court granted relief to the Blairs on their statute-of-limitations defense, EMC does not challenge that ruling. Appellee’s Br. at 32.

 

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11th Circuit: Motion to reschedule foreclosure does not violate RESPA

11th Circuit: Motion to reschedule foreclosure does not violate RESPA

Lexology-

On June 11, the U.S. Court of Appeals for the 11th Circuit affirmed the dismissal of a RESPA action against a mortgage servicer, concluding that rescheduling a foreclosure sale is not a violation of Regulation X’s prohibition on moving for an order of foreclosure sale after a borrower has submitted a complete loss-mitigation application. According to the opinion, a consumer’s home was the subject of an order of foreclosure, and the mortgage servicer subsequently approved a trial loan-modification plan for a six-month period. The servicer filed a motion to reschedule the foreclosure sale so that the sale would not occur unless the consumer failed to comply with the modification plan during the trial period. The consumer filed suit, alleging that the servicer violated Regulation X––which prohibits loan servicers from moving for an order of foreclosure sale after a borrower has submitted a complete loss-mitigation application––because the servicer rescheduled the foreclosure sale instead of cancelling it. The district court dismissed the action.

On appeal, the 11th Circuit agreed with the district court, concluding that the consumer failed to state a claim for a violation of Regulation X. The appellate court reasoned that Regulation X does not prohibit a servicer from moving to reschedule a foreclosure sale as that motion is not the same as the “order of sale,” a substantive and dispositive motion seeking authorization to conduct a sale at all, as referenced in Regulation X. Moreover, the appellate court argued that the consumer’s interpretation of the prohibition is inconsistent with the consumer protection goals of RESPA because it would disincent loan servicers from offering loss-mitigation options and helping borrowers complete loss-mitigation applications, if a foreclosure sale has already been scheduled. Lastly, the appellate court noted that the motion to reschedule is consistent with the CFPB’s commentary that, “[i]t is already standard industry practice for a servicer to suspend a foreclosure sale during any period where a borrower is making payments pursuant to the terms of a trial loan modification,” rejecting the consumer’s argument that the servicer should have cancelled the sale altogether.

[LEXOLOGY]

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Quicken Loans settles with Federal Housing Authority in fraudulent lending case

Quicken Loans settles with Federal Housing Authority in fraudulent lending case

CNN-

The Justice Department on Friday dismissed a lawsuit against Quicken Loans, after the company agreed to a $32.5 million settlement with the United States government. The agreement resolved years-long dispute over the company’s participation in a Federal Housing Administration lending program.

The government alleged in a 2015 lawsuit that Quicken Loans knowingly approved hundreds of loans insured by the FHA to unqualified borrowers. When the borrowers defaulted, the company profited off the loans ?— and cost the government millions, the complaint said.
Quicken Loans did not admit any wrongdoing as part of the settlement. Of the settlement funds, $25.5 million will go to recouping government losses, with another $7 million designated as interest on that amount, according to a statement Friday from a mediator who worked on the case, Judge Gerald Rosen.
[CNN]
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Chicago appeals court poised to decide if key Supreme Court decision applies to federal class actions

Chicago appeals court poised to decide if key Supreme Court decision applies to federal class actions

Cook County Record-

The U.S. Court of Appeals for the Seventh Circuit is poised to become the first appeals court in the country to decide whether a landmark U.S. Supreme Court decision could stop additional plaintiffs from joining class action lawsuits in states where they don’t live.

At issue is the Supreme Court’s decision in Bristol Meyers Squibb v. Superior Court of CaliforniaIn that decision, the justices found non-residents couldn’t join a class action claim against a defendant whose principal presence was determined to be in a different state. The decision overrruled the California Supreme Court, which had determined out-of-state plaintiffs could join a mass action against pharmaceutical company Bristol Meyers Squibb.

In the new case heading to the Seventh Circuit court in Chicago, appeals judges have been asked to weigh in on whether the same principle excluding out-of-state plaintiffs from class actions in state courts should also extend to the federal courts.

Federal district courts in various parts of the country have split on the matter, but a judge in the Northern District of Illinois in Chicago found in the case of Mussat v. IQVIA Inc. that federal courts lacked jurisdiction over non-resident class members because the defendant was not incorporated, or had its main headquarters, in Illinois.

[COOK COUNTY RECORD]

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IL Appeals panel says lawyer can’t hide ID of third party paying legal bills for businessman fighting judgment enforcement

IL Appeals panel says lawyer can’t hide ID of third party paying legal bills for businessman fighting judgment enforcement

Cook County Record-

A state appeals panel determined lawyers have no ability to keep from a court the identity of third parties paying legal bills for a client contesting attempts to uncover assets as part of an effort to enforce a judgment.

Michael Margules, Edward Amaral and Mosholou, Inc., registered a 2017 California Superior Court judgment of $1.675 million against John Beckstedt and When 2 Trade Group LLC in Cook County and filed citations to discover assets. When they didn’t like the response to the citations, they issued a third-party citation to discover assets against Richard Steck, the lawyer for Beckstedt and When 2 Trade, specifically seeking to discover who was paying for Steck’s services.

Steck said a third party had asked him to represent the debtors, and declined to reveal that party’s identity, citing both attorney-client privilege and the Illinois Rules of Professional Conduct. Margules, Amaral and Mosholu then asked Cook County Judge Michael Otto to force Steck to name the third party. Otto granted that motion and held Steck in contempt. He levied a fine of $25 per day until Steck complied with the ruling. Steck moved to reconsider, prompting Otto to stay the contempt order pending his anticipated appeal to the First District Illinois Appellate Court.

[COOK COUNTY RECORD]

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Seniors were sold a risk-free retirement with reverse mortgages. Now they face foreclosure.

Seniors were sold a risk-free retirement with reverse mortgages. Now they face foreclosure.

USA TODAY-

In a stealth aftershock of the Great Recession, nearly 100,000 loans that allowed senior citizens to tap into their home equity have failed, blindsiding elderly borrowers and their families and dragging down property values in their neighborhoods.

In many cases, the worst toll has fallen on those ill-equipped to shoulder it: urban African Americans, many of whom worked for most of their lives, then found themselves struggling in retirement.

Alarming reports from federal investigators five years ago led the Department of Housing and Urban Development to initiate a series of changes to protect seniors. USA TODAY’s review of government foreclosure data found a generation of families fell through the cracks and continue to suffer from reverse mortgage loans written a decade ago.

[USA TODAY]

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GREEN EMERALD HOMES, LLC v. 21st MORTGAGE CORPORATION | FL 2DCA – 21st Mortgage failed to present legally sufficient evidence of the amount due. We reverse and remand for the trial court to enter an order of involuntary dismissal, which was the remedy Green Emerald properly sought in the trial court.

GREEN EMERALD HOMES, LLC v. 21st MORTGAGE CORPORATION | FL 2DCA – 21st Mortgage failed to present legally sufficient evidence of the amount due. We reverse and remand for the trial court to enter an order of involuntary dismissal, which was the remedy Green Emerald properly sought in the trial court.

GREEN EMERALD HOMES, LLC, Appellant,
v.
21ST MORTGAGE CORPORATION, a Delaware corporation authorized to transact business in Florida, Appellee.

Case No. 2D17-2192.
District Court of Appeal of Florida, Second District.

Opinion filed June 7, 2019.
Appeal from the Circuit Court for Hillsborough County; William P. Levens, Senior Judge.

Mark P. Stopa of Stopa Law Firm, Tampa (withdrew after briefing); Latasha Scott of Lord Scott, PLLC, Tampa; Richard J. Mockler of Stay In My Home, P.A., St. Petersburg (substituted as counsel of record); and Angela L. Leiner of The Law Office of Angela L. Leiner, P.A., St. Petersburg, for Appellant.

Leslie S. White and Tim W. Sobczak of Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A., Orlando, and Dariel Abrahamy of Greenspoon Marder, P.A., Boca Raton, for Appellee.

SALARIO, Judge.

Green Emerald Homes, LLC appeals from a final judgment of foreclosure in favor of 21st Mortgage Corporation. Although Green Emerald was not a party to the mortgage the judgment foreclosed, it was the owner of the property subject to the mortgage at the time the complaint and lis pendens were filed and was a named defendant in the case. 21st Mortgage argues that we must affirm because, as a nonparty to the mortgage who purchased the property after the mortgage was recorded, Green Emerald lacks standing to dispute the legal sufficiency of its proof of the amount due, an element of the foreclosure cause of action. We reject that argument, find 21st Mortgage’s proof of the amount due legally insufficient, and reverse and remand for entry of a judgment of involuntary dismissal.

I.

In 2007, Rosalie Reid executed a note in favor of American Residential Lending, Inc. evidencing a debt of $186,000 and secured by a mortgage on real property. In 2014, 21st Mortgage filed a civil action to foreclose the mortgage based on Ms. Reid’s default of her payment obligations on the note. A lis pendens was filed on the same day. In addition to Ms. Reid, the foreclosure complaint and lis pendens named Green Emerald as a defendant and alleged that Green Emerald was the owner and was in possession of the property subject to its mortgage. The complaint requested a judgment “foreclosing the Defendants’ interest in the Property made the subject of the Mortgage.” In sum, then, the complaint named Green Emerald as a defendant and sought a judgment foreclosing its ownership interest in the mortgaged property.

Ms. Reid failed to answer the complaint, and she was ultimately the subject of a clerk’s default. Green Emerald did file an answer in which it denied the bulk of 21st Mortgage’s allegations and asserted several affirmative defenses. It admitted, however, 21st Mortgage’s allegation that Green Emerald was the owner of the property and was then in possession of it. From there, the case proceeded in the more-or-less normal course to a nonjury trial on 21st Mortgage’s claim for foreclosure.

At the beginning of trial, 21st Mortgage challenged Green Emerald’s “standing” to defend the lawsuit on the basis that it was not a party to the note and mortgage. It argued that because Green Emerald was not a party to the note and mortgage, it “should not be able to contest practically anything here” and that although Green Emerald had pleaded defenses, “there’s no standing for this particular defendant.” It asked the court to strike Green Emerald’s defenses, to hold that it was estopped from defending the case, or “otherwise provide extreme light, little weight to any arguments or objections here today.”

The trial court asked how Green Emerald came into possession of the property, and Green Emerald replied that it had “obtained title to the property and is the record owner.” Green Emerald reminded the court that its status as the owner of the property was established by the pleadings for purposes of the action. See, e.g., Gen. Accident Fire & Life Assurance Corp. v. Means, 362 So. 2d 135, 136 (Fla. 2d DCA 1978) (holding that there was “no issue” as to coverage under an insurance policy where coverage was alleged in the complaint and admitted in the answer). Throughout the case, no one ever disputed that Green Emerald owned the mortgaged property at the time of the filing of the foreclosure complaint and lis pendens.

21st Mortgage’s lone witness at trial was Whit Reed, a “legal team leader” for 21st Mortgage who worked with loans in default. Through this witness, 21st Mortgage admitted the original note and mortgage, default letter, and payment history. Mr. Reed also testified about a proposed final judgment 21st Mortgage had tendered to the trial court. That testimony revealed that 21st Mortgage had included in the amount-due finding of the proposed final judgment $77,270 more in principal indebtedness than was reflected by the trial evidence. Mr. Reed testified that the principal increase was most likely the result of a modification agreed to by Ms. Reid and a prior loan servicer. He further testified that a change in principal like the one reflected in the proposed final judgment could not be accomplished without a separate written agreement and, therefore, that there had to be a written agreement on that point somewhere, but that he did not have it with him. 21st Mortgage never disputed or clarified Mr. Reed’s testimony. Nor did it produce the likely loan modification (or any other document) or offer any other admissible evidence of its terms.

Green Emerald moved for an involuntary dismissal at the close of evidence. It argued, among other things, that 21st Mortgage failed to provide sufficient evidence of the amount due under the note—specifically, that without any evidence of the loan modification Mr. Reed testified to, 21st Mortgage could not prove the amount due. 21st Mortgage responded that Green Emerald lacked standing to challenge the amount due because it was not a party to the note or mortgage. The trial court denied Green Emerald’s motion but—recognizing the lack of evidence of the principal amount contained in the proposed final judgment—removed the additional $77,270, and it entered a judgment in favor of 21st Mortgage that foreclosed Green Emerald’s interests in the property and directed that the property be sold at a public sale. Green Emerald timely filed a notice of appeal.

II.

Green Emerald argues that we should reverse because 21st Mortgage failed to adduce legally sufficient proof of the amount due under the note and mortgage. We review the trial court’s legal conclusions de novo and its factual findings for competent substantial evidence. See Corya v. Sanders, 155 So. 3d 1279, 1283 (Fla. 4th DCA 2015) (“After a nonjury trial, review of trial court decisions based on legal questions are reviewed de novo and those based on findings of fact from disputed evidence are reviewed for competent, substantial evidence.”).

A.

As it did in the trial court, 21st Mortgage maintains on appeal that Green Emerald lacks standing to challenge the sufficiency of the evidence of the amount due under the note because it was not a party to the note and mortgage. The amount due under the note is an element of the foreclosure cause of action. See Ernest v. Carter, 368 So. 2d 428, 429 (Fla. 2d DCA 1979)Liberty Home Equity Sols., Inc. v. Raulston, 206 So. 3d 58, 60 (Fla. 4th DCA 2016)Bank of Am., N.A. v. Delgado, 166 So. 3d 857, 859 (Fla. 3d DCA 2015). The notion that a party named as a defendant in a civil action has no standing to require that the plaintiff prove the elements of its cause of action is a novel one, and we have been unable to find any other area where the law says that a named defendant must have standing to require that the plaintiff prove its case.

Requiring a named defendant to have standing to hold the plaintiff to its proof is quite out of line with the conventional understanding of standing that prevails in civil litigation. Standing is usually regarded as an attribute the claimant—not the defendant—must possess before it can open the courthouse doors and have its suit decided. See, e.g., Rogers & Ford Constr. Corp. v. Carlandia Corp., 626 So. 2d 1350, 1352 (Fla. 1993) (“The determination of standing to sue concerns a court’s exercise of jurisdiction to hear and decide the cause pled by a particular party.”); Progressive Express Ins. Co. v. McGrath Cmty. Chiropractic, 913 So. 2d 1281, 1284-85 (Fla. 2d DCA 2005) (explaining that standing is an obligation of the claimant in a civil case and stating that “the plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed”). The requirement of standing ensures that a claimant seeking a judgment from a court has a “sufficient interest in the outcome of litigation which will warrant the court’s entertaining it.” Gen. Dev. Corp. v. Kirk, 251 So. 2d 284, 286 (Fla. 2d DCA 1971). As applied to foreclosure cases, standing has been deemed to require (loosely stated) that the claimant seeking a foreclosure judgment have the right to enforce the note secured by the mortgage it seeks to foreclose. See § 673.3011, Fla. Stat. (2014); Verizzo v. Bank of N.Y. Mellon, 220 So. 3d 1262, 1264 (Fla. 2d DCA 2017).

Our court has not previously—in foreclosure cases or otherwise— restricted a named defendant’s right to demand that the plaintiff prove its cause of action based on a case-by-case or issue-by-issue analysis of the defendant’s standing to defend.[1] That would raise serious concerns of procedural due process. Consider the circumstances here. It is undisputed in this case that Green Emerald owns the property secured by the mortgage 21st Mortgage seeks to enforce. A titleholder is regarded by the law as an indispensable party to a foreclosure action, and 21st Mortgage doubtless named Green Emerald in the foreclosure complaint in this case for that reason. See Oakland Props. Corp. v. Hogan, 117 So. 846, 848 (Fla. 1928) (“One who holds the legal title to mortgaged property is not only necessary, but is an indispensable, party defendant in a suit to foreclose a mortgage.”); U.S. Bank Nat’l Ass’n v. Bevans, 138 So. 3d 1185, 1188 (Fla. 3d DCA 2014) (holding that the legal titleholder is an indispensable party to a foreclosure complaint without whom the litigation cannot proceed). Before Green Emerald could be stripped of its ownership of the subject property—the all-but-certain effect of the foreclosure judgment 21st Mortgage sought and obtained—it was unquestionably entitled to procedural due process. See Dep’t of Law Enf’t v. Real Prop., 588 So. 2d 957, 964 (Fla. 1991) (“Property rights are among the basic substantive rights expressly protected by the Florida Constitution.”); Adhin v. First Horizon Home Loans, 44 So. 3d 1245, 1254 n.6 (Fla. 5th DCA 2010) (explaining that due process protects the property interests of a subsequent purchaser of mortgaged property); Metro. Dade Cty. v. Sokolowski, 439 So. 2d 932, 934 (Fla. 3d DCA 1983) (“[A] property interest falls within the protections of procedural due process.”).

In the context of civil litigation, “[d]ue process mandates that in any judicial proceeding, the litigants must be afforded the basic elements of notice and [an] opportunity to be heard.” Shlishey the Best, Inc. v. CitiFinancial Equity Servs., Inc., 14 So. 3d 1271, 1273 (Fla. 2d DCA 2009) (quoting E.I. DuPont De Nemours & Co. v. Lambert, 654 So. 2d 226, 228 (Fla. 2d DCA 1995)). The right to be heard “includes more than simply being allowed to be present and to speak”; it includes the right to meaningfully introduce evidence, cross-examine witnesses, and be heard on questions of law. Vollmer v. Key Dev. Props., Inc., 966 So. 2d 1022, 1027 (Fla. 2d DCA 2007); see also Baron v. Baron, 941 So. 2d 1233, 1236 (Fla. 2d DCA 2006) (holding that a father had a due process right to introduce evidence, cross-examine witnesses, and be heard on questions of law with respect to a mother’s emergency motion to place their child in a therapeutic boarding school); Glary v. Israel, 53 So. 3d 1095, 1098-99 (Fla. 1st DCA 2011) (holding that a nonparty who was subject to an order compelling it to turn over funds to a receiver had a due process right to present evidence, cross-examine witnesses, and be heard on questions of law); Brinkley v. County of Flagler, 769 So. 2d 468, 472 (Fla. 5th DCA 2000) (holding that the owner of animals subject to a forfeiture order had a due process right to present evidence, cross-examine witnesses, and be heard on questions of law). Under the conception of standing asserted by 21st Mortgage, Green Emerald—or anyone else who purchases real property subsequent to the recording of a mortgage encumbering that property, for that matter—would not receive any of these long-recognized elements of procedural due process. It would be forced largely if not entirely to sit silent, regardless of the insufficiency of the plaintiff’s proof, while the property to which it holds title is foreclosed and sold at auction.

That would be a tough pill to swallow with any named defendant in a civil suit, and it is even more so here in light of a titleholder’s status as an indispensable party to a foreclosure suit. See Bank of N.Y. Mellon v. Burgiel, 248 So. 3d 237, 238 n.1 (Fla. 5th DCA 2018)Citibank, N.A. v. Villanueva, 174 So. 3d 612, 613 (Fla. 4th DCA 2015). An indispensable party is one who is “so essential to a suit that no final decision can be rendered without their joinder.” Hertz Corp. v. Piccolo, 453 So. 2d 12, 14 n.3 (Fla. 1984). As we explained in Department of Revenue ex rel. Preston v. Cummings, 871 So. 2d 1055, 1058 (Fla. 2d DCA 2004), an indispensable party is one “whose interest will be substantially and directly affected by the outcome of the case” or “whose interest in the subject matter is such that if he is not joined[,] a complete and efficient determination of the equities and rights between the other parties is not possible.” (first quoting Amerada Hess Corp. v. Morgan, 426 So. 2d 1122, 1125 (Fla. 1st DCA 1983); then quoting Allman v. Wolfe, 592 So. 2d 1261, 1263 (Fla. 2d DCA 1992)).

If the owner of property subject to a mortgage foreclosure action is so important as to be indispensable to a just adjudication, due process surely requires that the owner be permitted to defend the suit. See Ezem v. Fed. Nat’l Mortg. Ass’n, 153 So. 3d 341, 345 (Fla. 1st DCA 2014) (holding that a nonparty to a foreclosure action claiming to be a co-owner of the property subject to that action, although not a party to the mortgage securing it, was entitled to intervene because “[a]t the minimum, he is entitled to a hearing on his claimed interest”); cf. Villanueva, 174 So. 3d at 614 (holding that a foreclosure judgment was void where the subsequent purchasers of the subject property were not joined to the foreclosure litigation). If only the party to the note and mortgage is relevant, and the titleholder is nothing more than a set piece with no right to defend of any substance, there is no point in making the final resolution of a mortgage foreclosure action contingent on the titleholder being joined to the litigation.

In sum, then, a titleholder named as an indispensable party in a foreclosure suit has a due process right to defend the suit in the same way any other named party to civil litigation has a due process right to defend. It is not as a general proposition required to demonstrate that it has “standing” to assert a particular issue in the way of defense to the plaintiff’s claim for foreclosure.

B.

There are, however, two aspects of substantive foreclosure law that are commonly asserted to limit the types of issues and defenses a subsequent purchaser may raise. The first is that that an owner who acquired title to the property after a facially valid mortgage on that property has been recorded is estopped from disputing the validity of that mortgage. See CCM Pathfinder Palm Harbor Mgmt., LLC v. Unknown Heirs, 198 So. 3d 3, 7 (Fla. 2d DCA 2015) (holding that a subsequent purchaser “is `estopped from contesting the validity of the mortgage'” (quoting Eurovest, Ltd. v. Segall, 528 So. 2d 482, 483 (Fla. 3d DCA 1988))). The reason the law imposes this estoppel is that a purchaser subsequent to the recorded mortgage has constructive notice of the mortgage and could elect to assume the mortgage as a part of the purchase. Eurovest, 528 So. 2d at 483. When it declines that election, the purchaser “may not defend . . . on grounds which would be unavailable to him had he assumed payment of the mortgage.” Id. (holding that a subsequent purchaser was estopped from asserting the affirmative defense of want of consideration); see also Irwin v. Grogan-Cole, 590 So. 2d 1102, 1104 (Fla. 5th DCA 1991).

The second frequently cited rule that limits the kinds of defenses a subsequent purchaser can assert is that a subsequent purchaser who is not a party to the mortgage contract generally cannot assert rights under the contract that belong to the parties. See LaFaille v. Nationstar Mortg., LLC, 197 So. 3d 1246, 1247 (Fla. 3d DCA 2016); Clay Cty. Land Trust No. 08-04-25-0078-014-27, Orange Park Tr. Servs., LLC v. JPMorgan Chase Bank, Nat’l Ass’n, 152 So. 3d 83, 84 (Fla. 1st DCA 2014).[2] This is an extension to the mortgage foreclosure context of the hornbook contract law rule that a person who is neither a party to nor an intended third-party beneficiary of a contract has no rights under the contract to enforce. See Greenacre Props., Inc. v. Rao, 933 So. 2d 19, 23 (Fla. 2d DCA 2006) (“As a general rule, a person who is not a party to a contract cannot sue for a breach . . . even if the person receives some incidental benefit from the contract. A third party must establish that the contract either expressly creates rights for them . . . or that the provisions of the contract primarily and directly benefit the third party or a class of persons of which the third party is a member.”). The application of this general contract principle in the mortgage foreclosure context makes perfect sense because “we are to interpret and apply the provisions of mortgages the same way we interpret and apply the provisions of any other contract.” Green Tree Servicing, LLC v. Milam, 177 So. 3d 7, 12-13 (Fla. 2d DCA 2015).

The cases have sometimes loosely characterized the substantive rules that subsequent purchasers are estopped from contesting the validity of facially valid mortgages and cannot assert contract rights they do not own as related to a foreclosure defendant’s “standing” to defend. See, e.g., Rouffe v. CitiMortgage, Inc., 241 So. 3d 870, 872 (Fla. 4th DCA 2018); Clay Cty. Land Tr., 152 So. 3d at 84. But we should recognize these rules for what they are: limitations on the rights of particular parties in the foreclosure process imposed by substantive law. Their scope is confined to the limited subject areas they cover—disputes as to the validity of mortgages and the rights of nonparties to enforce contract provisions. On their face, they do not represent a determination that a subsequent purchaser lacks standing to contest practically anything a plaintiff might assert in a foreclosure case or that a subsequent purchaser must tie each and every matter it asserts by way of defense to some interest that gives it standing to assert that specific matter.[3] See Wilmington Tr., N.A. v. Alvarez, 239 So. 3d 1265, 1266 n.1 (Fla. 3d DCA 2018) (rejecting the argument that a subsequent purchaser “lack[ed] standing” to assert the statute of limitations as a defense to a foreclosure case); 3709 N. Flagler Drive Prodigy Land Tr. v. Bank of Am., N.A., 226 So. 3d 1040, 1042 (Fla. 4th DCA 2017) (holding that a subsequent purchaser may challenge a foreclosure plaintiff’s standing to foreclose because otherwise “a subsequent purchaser would never have the ability to defend against the taking of a bona fide interest in the property through a foreclosure sale”).

Green Emerald’s insistence that 21st Mortgage prove the required element of the amount due does not implicate either the validity of the mortgage or an effort to enforce provisions in a mortgage contract to which Green Emerald is not a party. Green Emerald is not saying that 21st Mortgage’s mortgage is invalid; it is saying that where the plaintiff’s own witness has testified as to the existence of a loan modification as the basis for its computation of the amount due, proof of that agreement’s terms is indispensable to proof of the amount due.[4] Nor is Green Emerald trying to assert any right that inured only to Ms. Reid’s benefit under the mortgage contract; it is asking the court to determine whether 21st Mortgage’s proof of the amount due under the note is legally sufficient to get a judgment that forecloses its interest in the mortgaged property. This is litigation defense 101—requiring the claimant to prove the elements of its case—not the assertion of some right that Green Emerald either does not have or is estopped by law from asserting.

We recognize that we have decided cases addressing a subsequent purchaser’s ability to intervene in a pending foreclosure action that hold that there is no right to intervene and that those cases sometimes speak in terms of the purchaser’s standing. Those cases have no bearing with regard to a subsequent purchaser who took title prior to the foreclosure litigation and has been named as a defendant in that litigation. First and foremost, those cases involve subsequent purchasers who acquired the mortgaged property after the foreclosure complaint and lis pendens were filed, not before. See, e.g., Bank of N.Y. Mellon for Certificateholders CWALT, Inc. v. HOA Rescue Fund, LLC, 249 So. 3d 731, 733-34 (Fla. 2d DCA 2018); Ventures Tr. 2013-I-H-R v. Asset Acquisitions & Holdings Tr., 202 So. 3d 939, 942-43 (Fla. 2d DCA 2016); Bonafide Props. v. Wells Fargo Bank, N.A., 198 So. 3d 694, 695 (Fla. 2d DCA 2016)Market Tampa Invs., LLC v. Stobaugh, 177 So. 3d 31, 32 (Fla. 2d DCA 2015). Because they purchase property with constructive if not actual notice of the fact that the property is subject to a foreclosure suit, the law treats purchasers pendente lite—pending litigation—accordingly and holds that they have no right to insert themselves into the pending litigation to which they were not previously a party. See Rutledge, 230 So. 3d at 552 (“Rutledge is a subsequent purchaser who was at least constructively aware of Wells Fargo’s recorded lis pendens when he purchased the property.”); Bonafide Props., 198 So. 3d at 695 (affirming an order denying a subsequent purchaser’s motion to intervene because “it is undisputed that [it] acquired its rights to the property four years after Wells Fargo initiated the foreclosure action and filed its notice of lis pendens”); see also Whitburn, LLC v. Wells Fargo Bank, N.A., 190 So. 3d 1087, 1091 (Fla. 2d DCA 2015) (holding that purchaser subsequent to lis pendens “took the property subject to the outcome of the litigation . . ., including the foreclosure sale”). In contrast to a purchaser pendente lite, a party who owns the mortgaged property at the time the foreclosure action and lis pendens are filed is an indispensable party to the litigation. Bevans, 138 So. 3d at 1188. Our court has (rightly) never held that a subsequent purchaser in that situation lacks the right to insist that the plaintiff that has haled the purchaser into court prove the elements of its case.

Furthermore, the questions on a motion to intervene are whether a nonparty has an interest in litigation that entitles it to intervene and whether as a matter of judicial discretion it should be permitted to intervene. See generally Union Cent. Life Ins. Co. v. Carlisle, 593 So. 2d 505, 507-08 (Fla. 1992). One major consideration applicable to the intervention by purchasers pendente lite is that allowing intervention invites the unnecessary protraction of litigation by a nonparty who knew full well at the time it took title that the property was in foreclosure. See Bymel v. Bank of Am., N.A., 159 So. 3d 345, 347 (Fla. 3d DCA 2015) (“Allowing [a purchaser pendente lite] to intervene would unnecessarily prolong the foreclosure action.”). To say that a nonparty to litigation does not have an interest sufficient to justify intervention because of when they acquired their interest or that intervention is not advisable under the facts out of concern for delay says nothing about whether a party named as a defendant by the plaintiff and actually joined in the litigation should be permitted to defend itself fully.

We also recognize that other courts have held that a subsequent purchaser has “standing” to contest the amount due because the computation of the amount due bears directly on its right of redemption—i.e., its right to cure the mortgagor’s indebtedness by paying everything that is due. See Clay Cty. Land Tr., 152 So. 3d at 85; see also § 45.0315, Fla. Stat. (2014); Beauchamp v. Bank of N.Y., 150 So. 3d 827, 828 (Fla. 4th DCA 2014). But that analysis proceeds from the assumption, which we think unwarranted, that a subsequent purchaser lacks standing to do anything in defense of a foreclosure case unless it can relate it to a right or interest specific to subsequent purchasers. As we have explained in this opinion, a subsequent purchaser has an ownership interest in property and as a matter of due process is entitled to defend in accord with its rights and obligations under applicable substantive law.

Accordingly, we hold that as the owner of the mortgaged property who took title before the filing of the lis pendens, Green Emerald was entitled to insist that 21st Mortgage present competent substantial evidence of the amount due under the note.[5] We now turn to whether it did so.

III.

In a foreclosure case, the amount due under the note must be proved by competent substantial evidence. Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So. 3d 280, 281 (Fla. 2d DCA 2014)E & Y Assets, LLC v. Sahadeo, 180 So. 3d 1162, 1163 (Fla. 4th DCA 2015). 21st Mortgage’s failure to produce a loan modification its own witness testified must have existed left it unable to meet that burden.

As we explained in Wolkoff, a foreclosure plaintiff typically proves the amount due “through the testimony of a competent witness who can authenticate the mortgagee’s business records and confirm that they accurately reflect the amount owed on the mortgage.” 153 So. 3d at 281 (emphasis added). Here, Mr. Reed’s testimony established without contradiction that at some point a document, most likely a loan modification agreement, was executed that changed the terms of the original note. Without the loan modification or other admissible evidence of its contents, it is not possible to determine the basis for 21st Mortgage’s computation of the principal, interest, or other charges folded into the total amount due in the final judgment because the record is simply silent on what (after modification) the borrower’s obligations in this regard were. Cf. Werb v. Green Tree Servicing, LLC, 231 So. 3d 483, 484 (Fla. 4th DCA 2017) (holding that the bank failed to prove the amount due where its only evidence was a witness’s testimony that the figure in a proposed final judgment, which had not been admitted into evidence, comported with the bank’s records; but it did not show how interest and additional fees were calculated). The trial court’s reduction of the claimed principal amount due did not cure this problem; the fact remains that there was no evidentiary basis to determine what the borrower in fact owed. We note that on appeal, not even 21st Mortgage has argued that its evidence of the amount due was legally sufficient.

IV.

21st Mortgage failed to present legally sufficient evidence of the amount due. We reverse and remand for the trial court to enter an order of involuntary dismissal, which was the remedy Green Emerald properly sought in the trial court.[6] See Tracey v. Wells Fargo Bank, N.A., 264 So. 3d 1152, 1161-65 (Fla. 2d DCA 2019) (holding that a new trial is generally improper upon a reversal based on the insufficiency of the evidence absent exceptional circumstances and harmonizing this court’s prior opinions on the scope of remand under this rubric).

Reversed and remanded with instructions.

ROTHSTEIN-YOUAKIM, J., Concurs.

VILLANTI, J., Concurring in part and dissenting in part.

VILLANTI, Judge, Concurring in part and dissenting in part.

I concur with that portion of the majority’s opinion that reverses the damages awarded in the final judgment because it is clear that 21st Mortgage failed to carry its burden of proof as to the amount of the judgment to which it was entitled. However, I cannot concur in the remainder of the opinion because, in my view, Green Emerald received all the process it was due.

It is true, as the majority points out, that Green Emerald held legal title to the property on the date that 21st Mortgage filed its foreclosure complaint. However, it is also clear from the record that Green Emerald took its title subject to 21st Mortgage’s prior recorded mortgage. Green Emerald had constructive, if not actual, notice of the recorded mortgage when it took title; yet it elected not to assume the mortgage, and it undertook no efforts to satisfy the mortgage debt so as to obtain clear title. Under Florida law, it is presumed that a buyer with notice of the mortgage took the mortgage debt into consideration in its purchase price of the property. See Spinney v. Winter Park Bldg. & Loan Ass’n, 162 So. 899, 903 (Fla. 1935) (quoting Ala.-Fla. Co. v. Mays, 149 So. 61, 64 (Fla. 1933)). And the titleholder has the right to either pay the mortgage debt or redeem the property rather than lose it to foreclosure. See § 45.0315, Fla. Stat. (2017) (“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, the mortgagor or the holder of any subordinate interest may cure the mortgagor’s indebtedness and prevent a foreclosure sale by paying the amount of moneys specified in the judgment, order, or decree of foreclosure, or if no judgment, order, or decree of foreclosure has been rendered, by tendering the performance due under the security agreement, including any amounts due because of the exercise of a right to accelerate, plus the reasonable expenses of proceeding to foreclosure incurred to the time of tender, including reasonable attorney’s fees of the creditor.”). If Green Emerald wanted to obtain clear title to the property, it simply needed to exercise its right to pay the mortgage debt that it knew existed when it took title to the property. Hence, contrary to what the majority asserts, it was not “all but certain” that Green Emerald would be stripped of its ownership of the property by any foreclosure judgment 21st Mortgage sought and obtained. That was all but certain only if Green Emerald had no intention of ever paying the mortgage debt that it knew encumbered the property when it took title.

Of course, we know that many companies were formed in the wake of Florida’s foreclosure crisis to do just that—take title from distressed homeowners at little to no expense, put rent-paying tenants in those properties, and then collect rents while not paying the mortgages until such time as the bank could foreclose. See, e.g., Mortgages: Most Common Forms of Fraud, Mortgage & Real Estate Executives Rpt. (Feb. 15, 2019). Many of these companies spent portions of their rent collections actively fighting foreclosure proceedings brought by banks that held purchase-money mortgages from the now-absent former homeowners with no intention of ever paying a dime toward the mortgage debt that they knew encumbered the properties. In my view, the broad sweep of the majority’s opinion will simply encourage such companies to continue to take advantage of desperate homeowners.

We have previously held that “[t]he extent of procedural due process protection varies with the character of the interest and nature of the proceeding involved.” Carmona v. Wal-Mart Stores, E., LP, 81 So. 3d 461, 464 (Fla. 2d DCA 2011)(quoting Carillon Cmty. Residential v. Seminole County, 45 So. 3d 7, 9 (Fla. 5th DCA 2010)). We also noted that due process does not lend itself to a single, unchanging test. Instead, courts must “consider the facts of the particular case to determine whether the parties have been accorded that which the state and federal constitutions demand.” Id. The majority recognizes that a third party who takes title after the foreclosure complaint and lis pendens have been filed does not have the right to challenge any aspect of the foreclosure proceeding. I would hold that the same is true for a third party who takes title before a foreclosure complaint is filed, who has notice of the prior-recorded mortgage, and who fails or refuses to assume that mortgage or ensure that it has been satisfied. The title-taker is charged with notice of the mortgage in either situation, and we should not “reward” those who rush in and secure title from distressed homeowners before a foreclosure complaint is filed by providing them with more extensive due process protections. Regardless of the filing of a complaint, the legal interest held is the same—legal title subject to the prior-recorded mortgage and the bank’s concomitant right to foreclose if the mortgage is not paid. Therefore, since the scope of the interest is the same, the scope of the due process protections should be the same.

Further, as I suggested two years ago, I continue to believe that it would behoove the legislature to amend the foreclosure statutes to require that any foreclosure defendant wishing to raise any defense other than payment make the payments due under the existing note and mortgage into the registry of the court. See Shaffer v. Deutsche Bank Nat’l Tr., 235 So. 3d 943, 947 (Fla. 2d DCA 2017) (Villanti, J., concurring specially). Such a procedure would go a long way toward ensuring that the due process rights of both the bank and the holder of legal title to the property are protected during foreclosure litigation.

In sum, I agree with the majority that Green Emerald had the due process right to challenge the amount of the foreclosure judgment because the amount of that judgment directly affected Green Emerald’s statutory right of redemption. However, I disagree with the remainder of the decision, which essentially strips 21st Mortgage of its security under the guise of due process. Therefore, I would reverse only the damages awarded in the final judgment and remand for further proceedings on that issue alone.

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

[1] We recognize that a foreclosure action is an action in rem or quasi in rem. See Aluia v. Dyck-O’Neal, Inc., 205 So. 3d 768, 773 (Fla. 2d DCA 2016). We also recognize that in some other proceedings against property, we have required a party who asserts an interest in the property to establish “standing.” See, e.g., In re Forfeiture of: $7464 + 2002 Cadillac Escalade, Identification No. 3GYEK63N02G222802, 872 So. 2d 1017, 1018 (Fla. 2d DCA 2004) (holding that only persons who have standing can participate in a forfeiture proceeding and that standing must be based on a claim to ownership of the property). Without undertaking to detail all of the ways in which a foreclosure proceeding may be different, we stress here that Green Emerald was a named defendant in the foreclosure suit and a judgment was sought against it, which gives it, as shown in the text, a due process right to defend the action.

[2] These cases involve allegations that a foreclosure plaintiff failed to comply with the default notice requirement of paragraph twenty-two of the standard residential mortgage contract. Because compliance with paragraph twenty-two is a condition precedent to a foreclosure suit, Konsulian v. Busey Bank, N.A., 61 So. 3d 1283, 1284-85 (Fla. 2d DCA 2011), there might be an argument that the failure to comply with paragraph twenty-two may be asserted by a named defendant to the suit that is not a party to the mortgage. By citing these cases, we do not express an opinion on that question.

[3] We do not mean to imply that these are the only two respects in which the law might treat any specific purchaser subsequent to the recording of a mortgage differently from the borrower under the note and mortgage or from another type of subsequent purchaser, such as one who acquires title after the filing of a foreclosure action. It is possible, for example, that the law might recognize legally consequential distinctions in the facts and circumstances under which a subsequent purchaser took title that the generic use of the term “subsequent purchaser” might mask. We discuss the two rules identified in the text because they are the rules upon which 21st Mortgage relies and because they are the ones discussed in the Florida cases addressing the standing of subsequent purchasers. We express no opinion on any other possibility.

[4] This distinguishes the cases on which 21st Mortgage relies, all of which involved the assertion of some defense that went to the validity of the mortgage or its express terms. See Wells Fargo Bank, N.A. v. Rutledge, 230 So. 3d 550, 552 (Fla. 2d DCA 2017) (holding that a third-party purchaser lacked standing to argue that the borrower’s signature had been forged on the note and mortgage); CCM Pathfinder, 198 So. 3d at 7 (holding that a subsequent purchaser was bound by a provision in the mortgage contract waiving the statute of limitations for a foreclosure action); LaFaille, 197 So. 3d at 1247 (stating that subsequent titleholders could not assert a contract right that belonged only to the parties to the mortgage); Eurovest, 528 So. 2d at 483 (holding that a third-party purchaser was estopped from arguing that the mortgage was procured by fraud and without consideration).

[5] The dissent says that a subsequent purchaser receives all the process it is due when its participation is limited to protecting its statutory right of redemption because (1) a subsequent purchaser takes title subject to the mortgage and (2) some subsequent purchasers take advantage of borrowers in distressed situations. As to the first point, the law already limits the subsequent purchaser’s rights on the grounds that it takes title subject to the mortgage; it holds that a subsequent purchaser is estopped from disputing the validity of a facially valid mortgage. As we have shown, that principle does not translate into the rule the dissent wants—namely, that a subsequent purchaser, even though it owns the property and is named as a defendant, can be precluded from saying or doing anything in defense of a foreclosure action unless it can convince a judge that its action is tied to the right of redemption. As to the second point, if bad behavior by some subsequent purchasers is a problem, the extent to which it demands action and what action it demands are policy questions properly addressed to the legislature and not questions that we as law-trained judges have either the technical competence or the information-gathering tools to answer. See Bonafide Props., 198 So. 3d at 698 (Altenbernd, J., concurring) (noting that the practice of some subsequent purchasers buying distressed properties and putting rent-paying tenants in them likely has “a measure of good . . . that should be preserved” and “a measure of bad that ought to be regulated or prohibited” and explaining that “[t]his court is not a proper forum to make these determinations or to establish any needed rule of law”). The dissent concludes by saying that our decision “strips 21st Mortgage of its security under the guise of due process.” That is not a reasonable characterization; at most, we have required that 21st Mortgage do what virtually any other plaintiff who seeks a judgment against virtually any other defendant must do—prove the elements of its case. And although we cannot preemptively decide the issue, we note that because the law treats each payment default under a note and mortgage as a separate event for res judicata purposes, the smart money says that 21st Mortgage can and will file a new foreclosure action (as soon as tomorrow, if it wants) based on payment defaults subsequent to those involved here. See Provident Funding Assocs., L.P. v. MDTR, 257 So. 3d 1114, 1118 (Fla. 2d DCA 2018) (holding that a judgment in an initial foreclosure action did not bar a subsequent action based on different payment defaults under the same note and mortgage where “[t]he final judgment in the first foreclosure action did not make any determination that would invalidate the note and mortgage or preclude [the plaintiff] from ever suing upon the note and mortgage” and relying on Singleton v. Greymar Associates, Inc., 882 So. 2d 1004 (Fla. 2004), in support of that proposition).

[6] We note that 21st Mortgage has not argued that there are components of the amount due that were sufficiently proved notwithstanding the absence of evidence with regard to the loan modification to which its witness testified. See, e.g., Boyette v. BAC Home Loans Servicing, LP, 164 So. 3d 9, 10 (Fla. 2d DCA 2015).

 

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Fourth Circuit Provides Relief to Chapter 13 Debtors for Some Underwater Mortgages

Fourth Circuit Provides Relief to Chapter 13 Debtors for Some Underwater Mortgages

Lexology-

In a victory for Chapter 13 debtors, the United States Court of Appeals for the Fourth Circuit recently issued a major decision that changes the way bankruptcy courts in North Carolina will deal with certain home mortgages in Chapter 13.

For over 22 years, bankruptcy courts in North Carolina prohibited Chapter 13 debtors from modifying the amount of a claim secured by a principal residence. But in Hurlburt v. Black, the Fourth Circuit reversed itself and held that the Bankruptcy Code allows a debtor to modify some home mortgage claims. Now, debtors with underwater, “short-term” mortgages will only be required to pay the value of their home and can discharge the balance as an unsecured claim.

In 2004, Larry Hurlbert bought his home from Juliet Black for $136,000. He paid $5,000 at closing and financed the balance with Black, signing a promissory note and deed of trust. The note had a 10-year term, requiring payment of $131,000 in principal plus 6% interest in 119 monthly, interest-only installments of $785.41, and a final balloon payment in May 2014. When the loan matured, Hulbert did not pay the balance, Black started foreclosure, and Hulbert filed for bankruptcy protection under Chapter 13.

[LEXOLOGY]

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Henderson v. COPPER RIDGE HOMES, LLC, | MISSISSIPPI SC – Finding that the trial court erred in granting Copper Ridge’s and First Bank’s post-foreclosure motions for dismissal of the Hendersons’ claims, the Court affirms the grant ofjudicial foreclosure, reverses the grant of summary judgment to both parties, and remands the case to the trial court for determination of the Hendersons’ claims.

Henderson v. COPPER RIDGE HOMES, LLC, | MISSISSIPPI SC – Finding that the trial court erred in granting Copper Ridge’s and First Bank’s post-foreclosure motions for dismissal of the Hendersons’ claims, the Court affirms the grant ofjudicial foreclosure, reverses the grant of summary judgment to both parties, and remands the case to the trial court for determination of the Hendersons’ claims.

H/T DUBIN LAW OFFICES

 

CINDY HENDERSON AND JOHN HENDERSON,
v.
COPPER RIDGE HOMES, LLC, RICHARD CONEY, INDIVIDUALLY AND FIRST BANK, A MISSISSIPPI BANKING CORPORATION.

No. 2017-CA-00959-SCT.
Supreme Court of Mississippi.
June 6, 2019.
Appeal from Pike County Circuit Court, 06/28/2017, Hon. Michael M. Taylor. Macy Derald Hanson Dennis I. Horn Shirley Payne W. Brady Kellems Joseph Preston Durr Alfred L. Felder Levoy Bryant Agnew, IV Trial Court Attorneys.

MACY DERALD HANSON, Attorney for Appellants.

DENNIS L. HORN, W. BRADY KELLEMS, SHIRLEY PAYNE, Attorneys for Appellees.

BEFORE RANDOLPH, C.J., MAXWELL AND BEAM, JJ.

ON MOTION FOR REHEARING

BEAM, Justice.

¶1. The motion for rehearing filed by First Bank is denied. The previous opinions are withdrawn, and these opinions are substituted therefor.

¶2. This appeal stems from a breach-of-contract and tort case in the Pike County Circuit Court. John and Cindy Henderson filed suit against Copper Ridge Homes (“Copper Ridge”) and First Bank regarding the construction of their new home in Magnolia, Mississippi. However, the case quickly spiraled into foreclosure proceedings upon the Hendersons’ defaulting on their loan with First Bank. Instead, the judge granted First Bank’s motion for judicial foreclosure.

¶3. After that, the Hendersons unsuccessfully moved multiple times to amend their complaint to add wrongful foreclosure. The judge granted Copper Ridge’s and First Bank’s motions for summary judgment on all of the Hendersons’ claims, finding that the claims, which arose from the alleged faulty construction of the house traveled with the title to the property. Because the Hendersons no longer owned any interest in the house and land, the judge found that they had lost their right to seek damages.

¶4. On appeal, the Hendersons argue that the trial court erred by granting First Bank a judicial foreclosure, by granting Copper Ridge’s and First Bank’s motions for summary judgment, and by denying their motions for leave to amend and to add wrongful foreclosure to their complaint. Finding that the trial court erred in granting Copper Ridge’s and First Bank’s post-foreclosure motions for dismissal of the Hendersons’ claims, the Court affirms the grant of judicial foreclosure, reverses the grant of summary judgment to both parties, and remands the case to the trial court for determination of the Hendersons’ claims.

FACTS AND PROCEDURAL HISTORY

¶5. The Hendersons and Copper Ridge entered into a new-home construction contract on May 9, 2014, in Magnolia, Mississippi. Shortly thereafter, on May 24, 2014, the Hendersons contracted with First Bank to finance the construction of their new home.

¶6. The Hendersons’ complaint stems from a dispute over the price of the home and whether the contract was a fixed-price or cost-plus contract.[1] The Hendersons contend that the contract was a fixed-price contract for $320,000, but Copper Ridge contends it was a cost-plus contract.

¶7. The construction contract contained a provision regarding the changes to the scope of work: any changes to be made had to be in writing. The record contains no evidence of any change orders. Yet the Hendersons received two invoices from Copper Ridge for overage charges in the amounts of $24,386.07 and $29,829.44.

¶8. The Hendersons further allege that First Bank, which exercised sole and exclusive control over the disbursements, had paid approximately $316,000 to Copper Ridge, leaving approximately $4,000 to complete the house under the fixed-price contract. John Henderson was asked to sign three backdated draw disbursements for First Bank. However, he refused to sign a final disbursement because the house was not close to being completed.

¶9. Dissatisfied with Copper Ridge and First Bank, the Hendersons filed their complaint on April 30, 2015, alleging breach-of-contract and tort claims against both parties. Shortly after filing their complaint, the Hendersons did not make their payment on May 23, 2015, as required by the promissory note. First Bank amended its initial answer on October 1, 2015, to include a counterclaim for judicial foreclosure. In response, the Hendersons filed a motion for leave to amend their complaint so they could add wrongful foreclosure, fraud, and breach of the duty of good faith and fair dealing to their complaint.

¶10. Because the foreclosure had not occurred at that time, the judge disallowed adding wrongful foreclosure, but he allowed the Hendersons to amend their complaint to include fraud and breach of the duty of good faith and fair dealing. At the summary-judgment hearing on judicial foreclosure, the trial court found that the Hendersons had not produced sufficient evidence to rebut the foreclosure; therefore, the judge granted First Bank’s motion for an order of judicial foreclosure.

¶11. Following the judicial foreclosure, the Hendersons sought leave to amend their complaint to add wrongful foreclosure a second time. Simultaneously, Copper Ridge and First Bank sought to dismiss the Hendersons’ claims altogether. The trial court denied the Hendersons’ motion for leave to amend and granted Copper Ridge’s and First Bank’s post-foreclosure summary-judgment motions, finding that the claims arising out of the alleged faulty construction of the house traveled with the title to the property. In view of the foreclosure, the trial court found that because the Hendersons no longer owned any interest in the house and land, they had lost their right to seek damages.

¶12. A third time, the Hendersons moved for leave to amend their complaint to add wrongful foreclosure, and the trial judge denied the motion. Aggrieved, the Hendersons appeal the orders entered by the trial court.

LAW AND ANALYSIS

I. Standard of Review

¶13. We must review three rulings on appeal—two grants of summary judgment and a denial of a motion to amend the complaint.

¶14. “We review the grant or denial of a motion for summary judgment de novo, viewing the evidence `in the light most favorable to the party against whom the motion has been made.'” Karpinsky v. Am. Nat’l Ins. Co., 109 So. 3d 84, 88 (Miss. 2013) (quoting Pratt v. Gulfport-Biloxi Reg’l Airport Auth., 97 So. 3d 68, 71 (Miss. 2012), overruled on other grounds by Wilcher v. Lincoln Cty. Bd. of Supervisors,243 So. 3d 177, 188 (Miss. 2018)).

Summary judgment is appropriate and “shall be rendered” if the “pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”

Id. (quoting M.R.C.P. 56(c)).

¶15. We review the denial of a motion to amend for abuse of discretion. Webb v. Braswell, 930 So. 2d 387, 392 (Miss. 2006).

II. First Grant of Summary Judgment: Judicial Foreclosure

¶16. First Bank first moved for summary judgment on its judicial foreclosure counterclaim. Tracking the summary judgment standard, First Bank argued there was no material fact dispute that the Hendersons had defaulted by not paying the construction loan and, consequently, First Bank was entitled to foreclosure as a matter of law. In support of its motion, the bank produced evidence of the promissory note that the Hendersons signed on May 23, 2014. The promissory note stated that the Hendersons had agreed to “pay this loan in one payment with all outstanding principal plus all accrued unpaid interest on May 23, 2015,” and to pay “regular monthly payments of all accrued unpaid interest due as of each payment date beginning July 5, 2014, with all subsequent interest payments to be due on the same day of each month after that.” First Bank also provided evidence of the Hendersons’ security for the promissory note, the assignment of the deposit account, and a construction deed of trust with First Bank as lender and beneficiary. The promissory note was not paid by May 23, 2015, and as of September 28, 2015, the payoff on the deed of trust was $326,969.38.

¶17. In response to First Bank’s motion, the Hendersons did not argue that the loan documents were erroneous; rather, they argued that First Bank’s alleged material breach was an excuse or defense to their default. The Hendersons further contended that ruling on the motion for judicial foreclosure then would have been premature when their other claims had yet to be adjudicated.

¶18. At this point, the trial judge granted First Bank’s request to foreclose, whileexpressly leaving open the Hendersons’ ability to pursue claims for damages against First Bank based on, among other things, alleged breaches of the loan agreement. Because the Hendersons chose to sue for money damages, the judge assured them, “nothing about a ruling, nothing about granting summary judgment on the foreclosure, cuts off any damages of the Plaintiff. As a matter of fact, it may create damage arguments for the Plaintiff.”

¶19. The judge’s decision to foreclose first and litigate later perhaps complicated matters. In hindsight, it would have been more practical for the court to delay granting a judicial foreclosure until it had resolved the Hendersons’ contract-based claims. That said, we cannot say the trial judge reversibly erred by allowing First Bank to foreclose based on the undisputed evidence of the Hendersons’ failure to pay the promissory note or by finding that the Hendersons had elected to pursue a claim for money damages against the bank instead of retaining title.

III. Second Grant of Summary Judgment: Dismissal of All Claims

¶20. We do, however, find error in the judge’s granting of First Bank’s secondmotion for summary judgment, which Copper Ridge joined. In these motions, both defendants argued the judicial foreclosure cut off the Hendersons’ right to pursue claims related to the alleged damage to the home.

¶21. First Bank argued it had purchased all of the Hendersons’ claims in the foreclosure. Similarly, Copper Ridge contended that because First Bank held title to the property, First Bank held all rights and claims associated with repairs or completion costs, so the Hendersons had no standing to pursue damages for construction claims against Copper Ridge. The Hendersons responded by arguing that their claims were personal and belonged to them and not to the real property. As they saw it, they lost neither claims nor standing in the foreclosure.

¶22. The trial judge agreed with First Bank and Copper Ridge. After previously stating at the judicial foreclosure motion hearing that the Hendersons would not forfeit the opportunity to argue their other claims, the trial judge found the judicial foreclosure “cut off” the Hendersons’ right to pursue their claims. Specifically, the trial judge ruled that “the claims arising out of the faulty construction of the house travel with the property” and that “no longer being in possession or owner[ship] of the property, those claims, to the extent that they exist, don’t belong to Plaintiff anymore.”

¶23. The Court finds that the trial court erred in finding that the claims traveled with the land and that the Hendersons thus lost rights to those claims. The deed of trust specifically stated that it conveys

all of Grantor’s right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, improvements and fixtures; all easements, rights of way, and appurtenances; all water, water rights and ditch rights; and all other rights, royalties and profits relating to the real property including without limitation all minerals, oil, gas, geothermal and similar matters, (the “Real Property”) located in Pike County, State of Mississippi.

(Emphasis added.)

¶24. In support of its theory, the bank relied on Citizens National Bank v. Dixieland Forest Products, LLC, in which the Court held that the bank had purchased the plaintiff’s lender-liability causes of action against the bank and thus had a right to be substituted as the party in interest and to have the case dismissed. Citizens Nat’l Bank v. Dixieland Forest Prods., LLC, 935 So. 2d 1004, 1014 (Miss. 2006). This case is not analogous to Citizens, though, because the bank in Citizens did not foreclose; it purchased the claims in order to satisfy a debt. Id. at 1008. The bank purchased those choses in action and later filed a motion in the lender-liability suit (which it had purchased) to substitute itself as the party plaintiff and to have the suit dismissed, arguing that it owned the remaining claims in the suit and could rightfully dismiss them. Id. The trial court denied the bank’s motion; however, this Court on appeal reversed the trial court’s ruling in light of Maranatha Faith Center, Inc. v. Colonial Trust Co., 904 So. 2d 1004 (Miss. 2004)Citizens, 935 So. 2d at 1009.

¶25. The Maranatha Court had held that the bank had purchased the plaintiff’s lender-liability causes of action against the bank and was subsequently substituted as a party of interest with rights to dismiss the case. Id. (citing Maranatha, 904 So. 2d at 1009). In Maranatha, a creditor was granted a judgment against its debtor, and the judgment went unsatisfied for months. Id. (citing Maranatha, 904 So. 2d at 1005). The creditor levied execution on Maranatha’s choses in action against another company and found that the chose in action could be sold under execution. Id. at 1010 (citing Maranatha, 904 So. 2d at 1005). Here, First Bank was not asserting that it had purchased the Hendersons’ claims to satisfy any remaining deficiency on a judgment; it suggested that the claims either traveled with the title to the property by virtue of the foreclosure or that the Hendersons had lost their rights and the bank should be substituted as the real party in interest.

¶26. The deed of trust specifically conveys only the property identified in the deed of trust in the event of foreclosure. It did not convey the Hendersons’ contractual or common-law rights related to either the promissory note or its separate contract with Copper Ridge.[2] Therefore, the Court holds that the trial court erred in finding that the Hendersons’ claims traveled with the title to the property upon foreclosure. Accordingly, we reverse the grant of summary judgment to Copper Ridge and First Bank.

IV. Denial of Motion to Amend the Complaint: Wrongful Foreclosure

¶27. As a final matter, the Hendersons argue the trial judge abused his discretion when he denied them leave to amend their complaint to add wrongful foreclosure.

¶28. Under Mississippi Rule of Civil Procedure 15(a), “a party may amend a pleading only by leave of court or upon written consent of the adverse party; leave shall be freely given when justice so requires.” M.R.C.P. 15(a). “While the trial court has discretion to allow an amendment and should do so freely under the proper circumstances, an amendment should not occur when to do so would prejudice [the] defendant.” Webb, 930 So. 2d at 393 (quoting Hester v. Bandy, 627 So. 2d 833, 839 (Miss. 1993)).

¶29. Because we affirm the first grant of summary judgment permitting the foreclosure, we question whether the Hendersons will meet the high bar set for a traditional wrongful-foreclosure claim. Nat’l Mortg. Co. v. Williams, 357 So. 2d 934, 935-36 (Miss. 1978) (“A mortgagor is entitled to recover damages for a wrongful or fraudulent foreclosure of the mortgage, as where an unlawful foreclosure is attempted solely from a malicious desire to injure the mortgagor; or he may recover damages where the foreclosure is conducted negligently or in bad faith, to his detriment . . . .” (quoting 59 C.J.S. Mortgages § 491, at 774 (1949))). That said, because we are reversing the second grant of summary judgment, we see no reason why leave should not freely be given to the Hendersons to amend their complaint to add claims based on alleged damages arising from the foreclosure. However, any amendment should be limited to a claim for money damages only. Generally, a wrongful-foreclosure claimant “has the right to elect between (1) having the sale set aside and (2) recovering from the mortgagee the damages suffered as a result of the wrongful foreclosure.” Id. at 936. But in this specific case, we find that allowing the Hendersons to amend their complaint to add a claim to set aside the foreclosure sale would be prejudicial to First Bank and thus is outside the discretionary authority of Rule 15(a). Webb, 930 So. 2d at 393. As the record reflects, before the foreclosure, the Hendersons elected to affirm the contract with First Bank and to pursue a claim for money damages. And nothing in our ruling should be construed as permitting the Hendersons to reverse course and now seek recision and reclamation of title.

CONCLUSION

¶30. Finding that the trial court erred in granting Copper Ridge’s and First Bank’s post-foreclosure summary-judgment motions on the Hendersons’ claims, the Court affirms the grant of judicial foreclosure, reverses the grant of summary judgment to Copper Ridge and First Bank, and remands the case to the trial court for proceedings consistent with this opinion.

¶31. AFFIRMED IN PART; REVERSED AND REMANDED IN PART.

RANDOLPH, C.J., KING, P.J., COLEMAN, MAXWELL, CHAMBERLIN AND ISHEE, JJ., CONCUR. KITCHENS, P.J., CONCURS WITH SEPARATE WRITTEN OPINION JOINED BY KING, P.J., AND BEAM, J.GRIFFIS, J., NOT PARTICIPATING.

KITCHENS, Presiding Justice, CONCURRING.

¶32. I fully join the majority opinion. I write separately to explain my vote with regard to whether the trial court erred in granting First Bank’s summary judgment motion for judicial foreclosure.

¶33. Cindy and John Henderson allege that First Bank “made unauthorized disbursements of the Henderson new home construction loan fund to Copper Ridge Homes[.]” After discovering those “unauthorized disbursements,” the Hendersons chose not to make any more payments on the promissory note. Assuming that is true,[3] First Bank was the first party to breach the contract. The Hendersons essentially argue that, since First Bank breached first, the trial court erred in granting the bank a judicial foreclosure. That argument is but partially correct and is not well developed.

¶34. Under the common law, “[a] party who has breached or failed to properly perform a contract has a responsibility and a right to cure the breach.” Byrd Bros., LLC v. Herring, 861 So. 2d 1070, 1073 (Miss. Ct. App. 2003) (citing Fitzner Pontiac-Buick-Cadillac, Inc. v. Smith, 523 So. 2d 324, 328 (Miss. 1988)). The nonbreaching party must give the breaching party notice of the breach and, assuming the breach can be cured, “must give [the breaching party] a reasonable opportunity to cure the breach.” Id. (citing Fitzner, 523 So. 2d at 328).

¶35. Additionally, there is a difference between a material and an immaterial breach.

A breach is material when there “is a failure to perform a substantial part of the contract or one or more of its essential terms or conditions, or if there is such a breach as substantially defeats its purpose,” or when “the breach of the contract is such that upon a reasonable construction of the contract, it is shown that the parties considered the breach as vital to the existence of the contract[.]”

UHS-Qualicare, Inc. v. Gulf Coast Cmty. Hosp., Inc., 525 So. 2d 746, 756 (Miss. 1987) (citations omitted). “Where the breach is a material one, the non-breaching party has a right to end the contract[.]” Herring, 861 So. 2d at 1073 (citing UHS-Qualicare, Inc., 525 So. 2d at 756). “[I]f the breach is immaterial or minor, the nonbreaching party is not relieved of its duty to perform but may still sue for damages.” Jeffrey Jackson, Mary Miller, Donald Campbell, et al., Encyclopedia of Miss. Law § 21:35 (2d ed.), Westlaw (database updated Oct. 2018) (citing Timms v. Pearson, 876 So. 2d 1083 (Miss. Ct. App. 2004)).

¶36. Based on these authorities, the Hendersons could have terminated the contract with First Bank if the bank’s breach had been material and if they had given First Bank an opportunity to cure it. Had the Hendersons terminated the contract, the trial court’s granting a judicial foreclosure to First Bank would have been erroneous. The issues of breach and the remedies available both to the Hendersons and to the bank would have to have been resolved before a judicial foreclosure could have occurred. But the record and arguments in this case are unclear with respect to this issue.

¶37. In their appellate brief, the Hendersons cite only one authority on this issue, Ferrara v. Walters, 919 So. 2d 876 (Miss. 2005), using that case to define a material breach. However, the Hendersons offered no argument or legal authorities to explain the reason First Bank’s breach was material as opposed to minor. Nor does the record reflect whether First Bank was given an opportunity to cure its alleged breach. Lacking argument on these points, we cannot ascertain from the record whether the contract was terminated before the Hendersons defaulted on their obligations under the promissory note.

¶38. “Failure to cite relevant authority obviates the appellate court’s obligation to review such issues.” Bell v. State, 879 So. 2d 423, 434 (Miss. 2004) (citing Simmons v. State, 805 So. 2d 452, 487 (Miss. 2001)). Additionally, when no “meaningful argument” is given in support of an issue on appeal, “the issue is considered waived.” Randolph v. State, 852 So. 2d 547, 558 (Miss. 2002)See also, Doss v. State, 956 So. 2d 1100, 1102 (Miss. Ct. App. 2007). The Hendersons waived a full consideration of the issue they presented by failing to cite relevant authority and to provide meaningful argument in support of the same.

¶39. Lawyers must provide authority in support of their arguments when appealing to this Court. If an issue is one of first impression, attorneys should state as much and, to the greatest extent possible, provide supporting authority for their arguments. The Court recognizes that Mississippi jurisprudence has not addressed every legal issue.[4] All the same, citation of some relevant authority—whether from other jurisdictions or secondary sources—is an important feature of appellate practice. Miss. R. App. P. 28(a)(7).

KING, P.J., AND BEAM, J., JOIN THIS OPINION.

[1] A cost-plus contract is “a contract in which payment is based on a fixed fee or a percentage added to the actual cost incurred.” Cost-plus contract, Black’s Law Dictionary (3d ed. 2001).

[2] We note the fact the Hendersons no longer own the home may impact the type of remedy or amount of damages available to them. But as we clarified in Business Communications, Inc. v. Banks, to prevail on a breach of contract claim, the plaintiff is required to prove by a preponderance of the evidence only “the existence of a valid and binding contract . . . that the defendant has broken, or breached it[,]. . . without regard to the remedy sought or the actual damage sustained.” Bus. Commc’ns, Inc. v. Banks,90 So.3d 1221, 1224-25 (Miss. 2012) (citation omitted)).

[3] “When reviewing an award of summary judgment, this Court . . . will presume that all evidence in the non-movant’s favor is true.” Diogenes Editions, Inc. v. State ex rel. Bd. of Trustees of Insts. of Higher Learning, 700 So. 2d 316, 319 (Miss. 1997) (quoting Allen v. Mac Tools, Inc., 671 So. 2d 636, 640 (Miss. 1996)).

[4] The issue at hand does not fall into this category.

 

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Note Capital Group, Inc. v. Perretta | RI SC –  the Perrettas contend that Note Capital was not entitled to enforce the note because the chain of title to the note was tainted by an improper transfer… that Note Capital was not entitled to enforce the note secured by a mortgage on their property because the note had been lost by the previous holder of the note, American Residential Equities, LIX, LLC (ARELIX),2 prior to the assignment of the mortgage to Note Capital

Note Capital Group, Inc. v. Perretta | RI SC – the Perrettas contend that Note Capital was not entitled to enforce the note because the chain of title to the note was tainted by an improper transfer… that Note Capital was not entitled to enforce the note secured by a mortgage on their property because the note had been lost by the previous holder of the note, American Residential Equities, LIX, LLC (ARELIX),2 prior to the assignment of the mortgage to Note Capital

H/T DUBIN LAW OFFICES

2019-17-7 by DinSFLA on Scribd

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TFH 6/16 | Perjury: Another Under Used Homeowner Weapon in the Battle Between Finality Versus Validity in Foreclosure Defense

TFH 6/16 | Perjury: Another Under Used Homeowner Weapon in the Battle Between Finality Versus Validity in Foreclosure Defense

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

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Sunday – June 16, 2019

Perjury: Another Under Used Homeowner Weapon in the Battle Between Finality Versus Validity in Foreclosure Defense

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Faced with fake notes, fake endorsements, fake mortgage assignments, fake declarations supporting fake summary judgment motions, just about fake everything robo-signed and photo-shopped, homeowners in foreclosure proceedings continue to ask why they are nevertheless being evicted from their homes while crooked lenders are not being prosecuted.

The answer initially is found in English history, where land Lords and eventually Lord lenders were given broad powers in Law Courts, even to re-enter and evict upon claims of default and no matter how much homeowner equity remained in the property.

Later, English Equity Courts ameliorated to some extent the harsh judgments of its Law Courts, but almost all States upon joining the United States adopted English common law riddled with one-sided evidentiary protections favoring lenders.

American foreclosure laws, although written in terms of English mortgage laws, were informally ameliorated by local lenders who lent pursuant to a traditional mortgage model, where local banks had a vested interest in protecting properties in default and therefore grew to accommodate local homeowners to the fullest extent possible by modifying loan terms in what became known as “loan workouts” — the predecessor to what became now known as “loan modifications”.

The advent of securitized trusts, however, as our listeners know from our past radio shows, changed everything, eventually encouraging a wide spectrum of corruption, the underlying foundation of which has been widespread perjury as never before.

Perjury, the false swearing under oath in official proceedings, is shockingly commonplace today in foreclosure litigation, taking many forms: for example, service of process perjury, loan application perjury, note ownership and endorsement perjury, mortgage assignment perjury, notarization perjury, power of attorney perjury, declaration and affidavit perjury, default notice perjury, general ledger perjury, and attorney affirmation perjury.

Yet, securitized trust depositors, master loan servicers, collection loan servicers, trustees, and their foreclosure attorneys including big law and foreclosure mills are rarely, if ever, prosecuted for their false public office recordings, false foreclosures, false evictions, and false deficiency judgments, or even subject to meaningful criminal investigations, while their perjury driven misconduct continues virtually unchallenged in all American jurisdictions to this day.

It is not because this Nation lacks adequate perjury laws. It has more than enough, for example:

Perjury Generally, making false statements under oath to federal officials, is punishable by up to 5 years imprisonment, plus fines, 18 USC Section 1621, and in California if causing wrongful execution of death, is punishable as a capital offense.

Federal Loan Perjury, making false statements in loan applications, is punishable by up to 30 years imprisonment, plus fines up to $1 Million, 18 USC Section 1014.

Federal Court Perjury, making false statements under oath in judicial proceedings, is punishable up to 5 years imprisonments, plus fines, 18 USC 1623.

State Recording Office Perjury, filing and recording forged or false documents with a public office, is punishable by up to 9 years imprisonment, plus fines, for instance, in California, as criminal forgery, 470 PC, as criminal perjury, 118 PC, and/or as criminal grand theft, 487 PC.

State Notary Fraud, malfeasance in notarization is punishable by up to from 1 year as a misdemeanor to 3 years as a felony, plus fines, depending upon the severity of the misconduct and the harm done.

All States also have such Perjury proscriptions, often vigorously enforced except when involving foreclosure litigation. Again, why?

The answer historically may conceptually be found in the underlying battle between Finality and Validity discussed in recent Foreclosure Hour broadcasts, and the public policy considerations underlie each.

The simply fact is that unlike many other areas of the law, foreclosure litigation has remained unevolving, principally because of a strong body of otherwise outdated court procedures and antiquated caselaw, protected by powerful vested money interests overly represented in the United States Congress and in the Treasury Department, and due to a largely incompetent system of legal education in the United States ignoring foreclosure defense.

As a result, efforts to combat foreclosure perjury has met formidable opposition from a phalanx of Finality Doctrines.

In an attempt to simplify the clash between Finality and Validity, think of the battlefield as a chessboard.

On one side are the Giant protectors of Finality: for example, Stare Decisis, Res Judicata, Claim Preclusion, Collateral Estoppel, Laches, Waiver, In Pari Delicto, Conclusive Presumptions, Prospective Application, Rooker-Feldman, Mootness, Detrimental Reliance, Statute of Limitations, Statute of Repose, Materiality, Limited System Resources, the Rule Ritual, and Binding Precedent.

And on the other side are the Giant protectors of Validity: for example, Perjury, Fraud, Due Process, Reconsideration, Personal Jurisdiction, Subject Matter Jurisdiction, Standing, Illegality, Obstruction of Justice, Unconscionability, Duress, Adhesion, Inadequate Legal Representation, Retroactive Application, Estoppel, Mandamus, Certiorari, Prohibition, and Public Support.

These competing Giant doctrines tug and pull at each other before and after foreclosure judgments are awarded, (1) protecting the status quo versus (2) conforming foreclosure laws and procedures to existing truths and realities, reminiscent in many ways of earlier legal battles in American law regarding a woman’s right to vote, a laborer’s right to unionize, and a minority’s right to unsegregated equal educational opportunities.

Yet, so far a homeowner’s right to fair treatment has lagged very far behind.

Please join John and me this Sunday as we identify and emphasize the heretofore neglected perjury rampant in foreclosure litigation today and make the case for criminal prosecutions to trigger needed Validity reforms.

Gary

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GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
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Honolulu, Hawaii 96813
Office: (808) 537-2300
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Email: gdubin@dubinlaw.net.

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HELL YES!! DID DEUTSCHE BANK SWEEP POSSIBLE MONEY LAUNDERING BY TRUMP UNDER THE RUG?

HELL YES!! DID DEUTSCHE BANK SWEEP POSSIBLE MONEY LAUNDERING BY TRUMP UNDER THE RUG?

Vanity Fair-

Last month, the New York Times reported that anti-money-laundering specialists at Deutsche Bank had flagged “suspicious activity” on the accounts of both Donald Trump and Jared Kushner in 2016 and 2017, advising that they be reported to a financial-crimes regulator—only to be told by higher-ups that their concerns were unfounded and to stop being so “negative.” And you’ll never believe it, but some people think that warrants further investigation!

In a letter sent to the Federal Reserve on Thursday, seven Democratic senators demandedthat Fed chair Jerome Powell and John Williams, the president of the Federal Reserve Bank of New York, examine the transactions and whether Deutsche Bank complied with the law after employees raised the alarm. “Only by conducting a thorough review of the full range of this activity can we better understand what happened in these cases; what practices, procedures, or personnel may need to be changed at the bank; and what regulators should do to ensure the Federal Reserve’s ability effectively to monitor compliance with anti-money-laundering laws,” wrote Senator Chris Van Hollen. “This is a test of the Fed’s independence,” he added in an interview with the Times. “It would be gross negligence if they weren’t investigating.” Other Democrats who signed the letter include Elizabeth Warren and Sherrod Brown.

[VANITY FAIR]

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NY Attorney General James Announces Payments To Borrowers From $45 Million Multi-State Settlement With PHH Mortgage Corporation

NY Attorney General James Announces Payments To Borrowers From $45 Million Multi-State Settlement With PHH Mortgage Corporation

Borrowers in New York State will Receive More Than $666,000 in Total

NEW YORK – Attorney General Letitia James today announced payments to over 800 New Yorkers from a $45 million settlement with New Jersey-based mortgage lender and servicer PHH Mortgage Corporation.

“Today, homeowners who were unfairly and unwittingly victimized receive a piece of justice that they deserve,” said Attorney General Letitia James. “It is unfortunate that New York homeowners were victimized by improper mortgage servicing in the first place, but are at least now receiving the financial compensation owed to them. We will continue to use every resource at our disposal to reverse the damaging practices that helped to create the foreclosure crisis, and hold bad-acting mortgage companies accountable.”

The settlement agreement reached by 49 states, the District of Columbia and 45 state mortgage regulators resolves allegations that PHH, the nation’s ninth largest non-bank residential mortgage servicer, improperly serviced mortgage loans from January 1, 2009 through December 31, 2012. The $45 million settlement includes $30.4 million in payments to borrowers, and additional payments to states and mortgage regulators for costs and fees related to the investigation.

Over 800 New York borrowers applied for payments. Rust Consulting, the settlement administrator, issued checks to claimants on Friday, May 31, 2019. Borrowers who lost their homes to foreclosure during the eligible period will receive approximately $1,500, and borrowers referred (but did not ultimately lose their home) to foreclosure will receive approximately $540. Total payments to New York State borrowers exceeds $666,000.

The settlement agreement also requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits, and provide audit results to a committee of states.The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

“Empire Justice Center applauds Attorney General Letitia James for representing New York homeowners in the recent multi-state settlement with PHH Mortgage Corporation,” said Kirsten Keefe, Senior Attorney and Program Director for HOPP Anchor Partner Program at the Empire Justice Center. “The settlement requires PHH to clean-up its mortgage servicing practices so that they help, rather than harm homeowners. In addition, over 800 New Yorkers will share in a total of cash payments of more than $660,000. Fortunately in New York State, many homeowners who might have otherwise lost their homes because of the misconduct of PHH, received assistance from housing counseling and legal service providers funded through the Attorney General’s Homeowner Protection Program (HOPP) and so remain in their homes. We are very fortunate to have an Attorney General who is continuing to press for the rights of New York’s homeowners and communities.”   

“We commend the Attorney General’s office for holding mortgage servicer’s accountable for their actions to protect New Yorker’s homes, which is their largest and most important asset,” said Susan Boss, Executive Director of The Housing Council at PathStone. “Along with the A.G’s office, we will continue to advocate for all New York homeowners.” 

“We are thankful to Attorney General James for her dedicated support of New York homeowners,” said Christie Peale, CEO and Executive Director of the Center for NYC Neighborhoods. “This settlement provides direct compensation to hundreds of families, some of whom lost their homes to foreclosure during the financial crisis. Just as importantly, it shows that New York State will hold other mortgage lenders and servicers accountable for fully complying with all servicing regulations, and treating homeowners equitably.” 

The case was handled Deputy Bureau Chief Laura J. Levine under the supervision of Bureau Chief Jane M. Azia in the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General of Economic Justice Christopher D’Angelo.

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



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BOGDEN v. CITIGROUP, INC., | Cal: Court of Appeal, 2nd Appellate Dist. – Bogden argues that her attorney’s declaration was sufficient under Code of Civil Procedure section 473, subdivision (b) to justify mandatory relief from the dismissal of her action against defendants and respondents Citigroup, Inc., Citibank, N.A., Citi Residential Lending, Inc., CitiMortgage Inc., Associates First Capital Corp. and CR Title Services (collectively, Citibank). We agree and reverse.

BOGDEN v. CITIGROUP, INC., | Cal: Court of Appeal, 2nd Appellate Dist. – Bogden argues that her attorney’s declaration was sufficient under Code of Civil Procedure section 473, subdivision (b) to justify mandatory relief from the dismissal of her action against defendants and respondents Citigroup, Inc., Citibank, N.A., Citi Residential Lending, Inc., CitiMortgage Inc., Associates First Capital Corp. and CR Title Services (collectively, Citibank). We agree and reverse.

 

DIANA BOGDEN, Plaintiff and Appellant,
v.
CITIGROUP, INC., et al., Defendants and Respondents.

No. B278352.
Court of Appeals of California, Second District, Division Five.
Filed May 30, 2019.
APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. BC526888, Holly E. Kendig, Judge. Reversed.

Diana Bogden, in pro. per., for Plaintiff and Appellant.

Bryan Cave Leighton Paisner, and Alfred Shaumyan, for Defendants and Respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

RUBIN, P.J.

Plaintiff and appellant Diana Bogden appeals from the trial court’s denial of her motion to vacate, for attorney fault, a dismissal entered against her. Bogden argues that her attorney’s declaration was sufficient under Code of Civil Procedure section 473, subdivision (b) to justify mandatory relief from the dismissal of her action against defendants and respondents Citigroup, Inc., Citibank, N.A., Citi Residential Lending, Inc., CitiMortgage Inc., Associates First Capital Corp. and CR Title Services (collectively, Citibank). We agree and reverse.

FACTUAL AND PROCEDURAL BACKGROUND

To call this case a procedural quagmire is something of an understatement. Bogden was one of many plaintiffs in a mass-joinder litigation brought by an attorney who abandoned his clients shortly after filing suit, and was suspended from the practice of law while the action was pending. Although the court and opposing counsel were aware of the attorney’s apparent abandonment, if not his actual suspension, they nonetheless allowed the action to proceed to dismissal against Bogden and her co-plaintiffs when they were virtually unrepresented. An associate who joined the suspended attorney’s firm filed a motion to vacate the dismissal, supported by a declaration of fault by the suspended attorney. Just before the hearing on the motion to vacate, a receiver took over the troubled firm and the parties stipulated to a continuance of the motion to vacate. The court denied the continuance, proceeded to a hearing where neither party appeared, and denied the motion to vacate.

As we shall explain, the road to this miscarriage of justice also contained a notice of ruling which did not match the court’s order, a dismissal order which did not match the court’s intended order, and a number of attorneys not officially substituting out of a representation when they should have done so.

Our recitation of the complete history of the case begins not with plaintiff Bogden, but with her attorney, Vito Torchia, Jr. and his law firm, Brookstone Law, PC.

1. Attorney Torchia and Brookstone Law

Attorney Torchia opened Brookstone in 2009. Some time after, he “expanded the scope of Brookstone’s practice to include mass-joinder litigation and related legal services necessary to postpone foreclosure sales on real property (e.g., bankruptcy). Mass-joinder litigation refers to lawsuits in which numerous (e.g., hundreds of) property/homeowners sue their common mortgage lender or servicer for alleged false, fraudulent, and deceptive lending and foreclosure practices.”

While it is unknown how Bogden came to be a client of Brookstone, Brookstone obtained some of its clients by means of “mass mailing advertising” to property owners.

2. The Mass-Joinder Complaint in This Action

On November 5, 2013, Attorney Torchia filed the complaint against Citibank in this action.[1] The plaintiffs were 68 individuals, Bogden among them, who together alleged 24 causes of action arising from: (1) the intentional placement of borrowers into dangerous loans they could not afford by use of deceptive tactics; (2) individual appraisal inflation; (3) market-fixing; (4) deception in loan modifications; and (5) (with respect to some plaintiffs other than Bogden) unauthorized foreclosures.

The complaint consisted of approximately 100 pages of allegations on behalf of all of the plaintiffs together, followed by an appendix setting forth the facts pertaining to each individual plaintiff. The appendix indicates that Bogden’s complaint arises from a mortgage refinance. She alleged that: (1) she had been steered into an adjustable rate mortgage, but did not know the interest rate was, in fact, adjustable, nor did she know her payments for the first five years were interest-only; (2) Citibank had altered her loan application without her knowledge, to indicate that she had a greater income, so that she would be approved for a loan she could not, in reality, afford; (3) defendants fraudulently inflated the appraisal on her property to justify an increased loan amount; (4) Citibank represented that she would be able to refinance the loan later, but she could not do so, because her actual income was too low and she had insufficient equity in her home; and (5) had she known the truth, she never would have accepted the loan.

3. The Case is Removed to Federal Court

On January 6, 2014, Citibank removed the case to federal court, due to the presence of a single federal law cause of action. The case would ultimately be remanded, but the proceedings in federal court are notable because it was during these proceedings that Attorney Torchia first disappeared.

4. Attorney Torchia Stops Participating

After the case was removed to federal court, plaintiffs conceded that their federal cause of action was not properly pleaded and should be dismissed, which would defeat federal question jurisdiction. On April 22, 2014, the district court concluded that the matter should be remanded back to state court, but indicated that its remand order would not be effective until plaintiffs filed a request for dismissal of their federal cause of action.

Attorney Torchia did not file a request for dismissal. Nor did he respond to a series of orders to show cause why he should not be sanctioned for failing to do so and failing to appear. Eventually, the district court dismissed the federal cause of action itself, imposed sanctions, remanded the matter to state court, and required Attorney Torchia to pay Citibank over $16,000 in attorney fees. The court’s order explained that Attorney Torchia could not “proceed with inappropriate litigation tactics, fail to comply with court orders, and cause the opposing parties to incur unnecessary costs, without consequences.” Attorney Torchia did not pay, and a bench warrant would ultimately be issued in February 2015.

5. The Case Returns to State Court

The case was remanded in August 2014. By order of August 21, 2014, the trial court set the case for a case management conference for September 29, 2014.

6. Citibank Demurs and Attorney Torchia Does Not Oppose

On September 10, 2014, Citibank demurred to the complaint, arguing, among other things, that the plaintiffs were misjoined. Attorney Torchia filed no opposition to the demurrer. Nor did he file an opposition to Citibank’s motion to strike, or the other defendants’ motions challenging the complaint. Attorney Torchia simply did not participate in the case, just as in federal court.

7. Attorney Torchia Briefly Surfaces in Connection with the Case Management Conference

After the case had been remanded to state court, Attorney Torchia filed only two documents on behalf of plaintiffs. The first was a September 26, 2014 case management statement for plaintiffs. Attorney Torchia also attended, by telephone, the September 29, 2014 case management conference. At the conference, the court ordered Attorney Torchia to file “a detailed declaration with information of all parties, including which parties have been served and what remains in this case” by October 17, 2014. The case management conference was continued to May 12, 2015, to be heard with the then-pending demurrers.

Attorney Torchia did not file the required declaration. In fact, he would go on to file only one more document on behalf of plaintiffs, an association of counsel.

8. Brookstone Has a Win in the Petersen Litigation

Before we discuss the association of counsel, we pause to recognize that, while Brookstone’s mass-joinder action against Citibank was pending in this court, Brookstone had been pursuing other mass-joinder litigations in other courts. Brookstone’s action against Countrywide Financial Corporation had been dismissed for misjoinder of plaintiffs. On December 11, 2014, Division Three of the Court of Appeal, Fourth Appellate District reversed, holding, albeit over a dissent, that Brookstone’s mass-joinder action was not, in fact, misjoined. (Petersen v. Bank of America Corp. (2014) 232 Cal.App.4th 238 (Petersen).) The Petersenaction had been filed by Attorney Torchia on behalf of 965 plaintiffs; and the complaint contained similar allegations to the complaint in this case. (Id. at pp. 240-241.) Review was denied in Petersen on March 25, 2015.

Because Attorney Torchia did not oppose Citibank’s demurrer, he did not bring the Petersen opinion to the court’s attention in response to Citibank’s demurrer for misjoinder. By the time the demurrer was heard, May 12, 2015, the Petersen case was final.

9. Attorney Torchia Associates in Attorney Mortimer

On March 4, 2015, Attorney Torchia filed, on behalf of plaintiffs, a notice of association of counsel, associating in as co-counsel Attorney John E. Mortimer, a non-Brookstone attorney. Both attorneys signed this association. Attorney Mortimer would ultimately submit a declaration explaining that he “agreed to assist as requested, and as mutually agreed upon, but never independently.” He was never asked to do anything by Attorney Torchia, and therefore, did nothing in the case.

After filing the association of Attorney Mortimer, Attorney Torchia filed nothing else in this case, until he was called upon to file a declaration of attorney fault.

10. The May 12, 2015 Demurrer Hearing Proceeds Without Attorney Torchia

Prior to the May 12, 2015 hearing, Citibank filed a notice of non-opposition to its demurrer.

Neither Attorney Torchia nor Attorney Mortimer attended the May 12, 2015 hearing.

Two things occurred at the demurrer hearing, somewhat simultaneously. First, one of the plaintiffs, Earl Luevano, had sought permission to substitute in for Attorney Torchia as a self-represented litigant, but had not been able to obtain Attorney Torchia’s signature on the substitution. The court issued an order allowing Luevano to substitute in without Attorney Torchia’s signature. The court stated, “The court bases this order on the court’s judicial notice of the proceedings in Federal District Court . . ., wherein attorney Torchia has failed to appear multiple times for hearings, and failed to follow court orders, and had to be ordered to appear via a bench warrant. Similarly, attorney Torchia failed to appear . . . today for a hearing on two demurrers, and failed to file any opposition. Therefore, the court rules plaintiff Luevano may terminate present counsel and file a Notice of Substitution without counsel’s signature, based on the court’s determination that plaintiff Earl Luevano’s attempts to find his counsel and obtain a signature would be futile.”

At the same time, the court sustained the demurrers for misjoinder of plaintiffs.[2]Other than plaintiff Luevano, who had sought permission to appear for himself, no one appeared for any of the plaintiffs. There is no indication that anyone present at the hearing questioned whether it was appropriate to proceed, given Attorney Torchia’s apparent abandonment of his clients.

The court concluded that the plaintiffs were improperly joined, in that they each relied on different transactions and alleged different misrepresentations based on different evidence. The court’s minute order states, “one of the plaintiff’s [sic] may amend to continue this lawsuit against the defendant or defendants of their choosing, within 10 days, . . .”[3] The court’s minute order did not explicitly address the disposition of the complaint as it pertained to all of the other plaintiffs.

Citibank was to give notice of ruling.

11. Citibank Serves an Erroneous Notice of Ruling

On May 13, 2015, Citibank served notice of ruling, which states that its demurrer “was SUSTAINED on the grounds of misjoinder with 10 days leave to amend as to all Plaintiffs, . . .” This is incorrect; the court’s minute order states that only one plaintiff may amend, while Citibank’s notice of ruling provided that “all Plaintiffs” had 10 days leave to amend. On appeal, Citibank represents that the trial court did, in fact, grant leave “so that a single plaintiff could file an amended complaint,” which is not what it stated in its notice of ruling. In reply, Bogden takes the position that the court had granted all plaintiffs leave to amend, as set forth in Citibank’s notice of ruling, and suggests that it was the court’s minute order which was wrong. We conclude the court’s minute order, and not Citibank’s notice of ruling, properly expresses the court’s ruling: the court sustained the demurrer on the ground of misjoinder, and permitted only a single plaintiff to amend.

However, Citibank’s mistaken notice of ruling would be the cause of confusion by the time of the motion to vacate. As we have noted, no counsel for plaintiffs attended the hearing, and the notice of ruling from Citibank indicated that, at this stage in the proceedings, all plaintiffs were permitted to file an amended pleading. In other words, Citibank’s notice of ruling gave the impression that plaintiffs were given a second bite at the misjoinder apple, even though this did not appear to have been the court’s ruling.

12. Attorney Torchia Is Suspended; Does Not Act

Unbeknownst to the parties, on May 14, 2015, two days after the trial court sustained Citibank’s demurrer, the State Bar Court entered Attorney Torchia’s default in disciplinary proceedings pending against him. As a result of his default, Attorney Torchia was enrolled as inactive as of May 17, 2015. Thus, during the 10-day period in which a single plaintiff had leave to file an amended complaint, Attorney Torchia was suspended from practice. No amended complaint was filed.

13. The Action is Dismissed With Prejudice

Given that the 10 days passed with no amended complaint, Citibank drafted and served a proposed order dismissing the claims of all plaintiffs. The proposed order indicated that the complaint was dismissed with prejudice. On June 12, 2015, the court signed the order.

On July 6, 2015, Citibank served notice of entry of that order on Attorneys Torchia and Mortimer.

14. Bogden Attempts to Take Action

According to Bogden, Citibank telephoned her on July 17, 2015, telling her that the case had been dismissed, so it was commencing foreclosure proceedings. At this point, she attempted to reach Attorney Torchia, but could not get a response from anyone at Brookstone. She ultimately came to understand that counsel had stopped working on the case sometime in 2014, but had not told his clients.

On July 21, 2015, Bogden, acting in pro. per., but without having formally substituted in, filed a motion requesting compliance with Code of Civil Procedure section 286 and for reconsideration of the order of dismissal.[4]

Section 286 provides, “When an attorney dies, or is removed or suspended, or ceases to act as such, a party to an action, for whom he was acting as attorney, must, before any further proceedings are had against him, be required by the adverse party, by written notice, to appoint another attorney, or to appear in person.” Case authority provides that when notice is required under section 286 but not given, the court is “deprived of jurisdiction.” (California Water Service Co. v. Edward Sidebotham & Son, Inc. (1964) 224 Cal.App.2d 715, 734.) Proceedings occurring in violation of this section are void, and may be set aside as such on noticed motion. (Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 743.)

Bogden’s motion did not specifically seek to vacate the court’s orders. Instead, Bogden sought reconsideration of the dismissal, and retroactive notice under section 286. This motion, which we refer to as “Bogden’s section 286 motion,” was set for hearing on March 4, 2016, was continued once by stipulation, and would never actually be heard.

15. The July 30, 2015 Status Conference

A status conference was held on July 30, 2015. Bogden was represented by counsel at the hearing. Attorney David Azar filed a notice of limited scope representation for Bogden, stating he was representing her only at the status conference.[5] At the status conference, Attorney Azar informed the court that the order of dismissal had been with prejudice. The court explained that it had not intended to dismiss the plaintiffs with prejudice, and would consider an amended order. A status conference regarding submission of an amended order of dismissal was set for September 8, 2015. Attorney Azar filed a second notice of limited scope representation, in order to continue representing Bogden to negotiate the amended order.

16. Attorney Jonathan Tarkowski of Brookstone Becomes Involved

At this point, Attorney Jonathan Tarkowski represented himself to be a new attorney with Brookstone and “counsel for all Plaintiffs.” He filed a motion for an amended order dismissing the plaintiffs’ claims without prejudice. Thereafter, negotiations took place among Attorney Azar (representing Bogden), Attorney Tarkowski (possibly representing all plaintiffs) and counsel for Citibank, attempting to reach agreement on a joint proposed order.[6] They could not do so.

17. The Dismissal is Amended to “Without Prejudice”

At the hearing on September 8, 2015, the court ordered its prior order of dismissal with prejudice amended nunc pro tunc to a dismissal without prejudice. The court expressed frustration with Citibank’s counsel for having drafted the order as a dismissal with prejudice when the court had never intended that. At this hearing, the court also questioned why Attorney Azar had not contacted Attorney Mortimer, who was still counsel of record for plaintiffs.

18. Attorney Mortimer Withdraws

The court’s comments regarding Attorney Mortimer brought results. On October 1, 2015, Attorney Mortimer, who had done nothing in the case since he had been associated in, withdrew his association as co-counsel for plaintiffs.

19. Attorney Tarkowski Files a Motion to Vacate the Dismissal

On November 12, 2015, Attorney Tarkowski, purporting to act for all plaintiffs, filed a motion to vacate the dismissal under section 473. The motion was set for hearing on August 10, 2016.

Attorney Tarkowski sought to vacate both the dismissal and the order sustaining the demurrer which led to the dismissal. He sought relief under both branches of section 473 — discretionary relief and mandatory relief for attorney fault. Additionally, he sought relief under the court’s inherent power to provide equitable relief.

As we will resolve the appeal on the issue of mandatory relief due to attorney fault, we limit our discussion of the motion to that basis. Section 473(b)’s mandatory relief provision states in pertinent part: “Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect. The court shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.”

Attorney Tarkowski argued that the adverse demurrer ruling and dismissal arose because of Attorney Torchia’s failure to oppose the demurrer. He specifically argued that if Attorney Torchia had bothered to oppose the demurrer, he could could have successfully defeated the misjoinder argument by relying on the recent Petersen case.

The motion was supported by a declaration of Attorney Torchia accepting responsibility for the dismissal of the action. First, he admitted fault for failing to oppose the demurrer. He explained that, during this time, he fell into a depression and “started drinking at an alarming rate.” He explained, “As a result of my deep depression and heavy drinking, I failed to properly represent the clients myself, or provide for their representation by proving adequate support and assistance through other attorneys.” He stated, “Due to my condition I failed to draft and file oppositions to any and all Defendants’ demurrers.” He also admitted failing to attend the hearing. He stated, “I do believe that if I was not in deep depression, heavily drinking, and isolated that I would have opposed the demurrers filed by Defendants and attended the May 12, 2015 [hearing].”

Second, he admitted fault for not responding when granted 10 days leave to amend. He admitted that he was suspended effective May 17, 2015 (five days after the hearing on the demurrer). He stated that he does not recall “when or if” he was served with Citibank’s notice of ruling from the demurrer hearing. Nonetheless, he explained that if he was served with the notice of ruling (or the orders), he was not licensed to practice law at that time. If he had been able to practice law and was not depressed or under the influence of alcohol, he “would have filed an amended complaint to properly address the joinder issue on which Citi Defendants’ demurrer was granted,” by relying on Petersen. More than that, Attorney Torchia admitted, “I failed to adequately notify Plaintiffs in this matter of my suspension from practicing law and their rights as a result of my suspension.”

Finally, Attorney Torchia admitted that all fault was his and not Attorney Mortimer’s. He explained that, although he had associated in Attorney Mortimer, he “failed to provide any instructions to Mr. Mortimer as to proceed with prosecuting the case. I failed to notify Mr. Mortimer of hearings, filings, deadlines, and/or tasks that needed to be completed to prosecute this action.” Attorney Mortimer filed a declaration confirming that he had associated in to assist “as requested” by Brookstone, but that he had never been requested to provide any legal services in the case.

20. Attorney Tarkowski Seeks Leave to File an Amended Complaint

When a motion to vacate seeks discretionary relief under section 473, as Attorney Tarkowski’s motion did, the motion must be accompanied by a copy of the pleading proposed to be filed. Instead of attaching a proposed amended complaint to the motion for relief from default, Attorney Tarkowski filed a simultaneous motion for leave to file a first amended complaint. The proposed amended complaint was again, a mass-joinder complaint, filed on behalf of many plaintiffs, including Bogden.

21. A Receiver Takes Over Brookstone

While the parties were awaiting the August 2016 hearing on the motion to vacate, they were blissfully unaware that the Federal Trade Commission (FTC) was preparing a complaint against Brookstone and related individuals and entities, including Attorneys Torchia and Tarkowski. While the actual allegations of the FTC are not before us, it appears that the FTC believed Brookstone ran afoul of the federal Mortgage Assistance Relief Services Rule, possibly in connection with the advertising of its services to consumers.

The FTC obtained the appointment of a temporary receiver over Brookstone by means of a temporary restraining order dated June 1, 2016. The receivership was to last until to July 1, 2016, so that the matter could be heard on the FTC’s application for a preliminary injunction.

22. The Receiver Requests a Stay; The Parties Stipulate to It

On June 17, 2016, the receiver filed a notice, in this action, that Brookstone had been placed in receivership, and requested a 90-day stay of proceedings. The receiver stated that it had taken control of Brookstone “and suspended operations.” It represented that Brookstone would remain closed until the hearing on the preliminary injunction and, if such an injunction issued, Brookstone “will remain closed indefinitely afterwards . . . .” The receiver requested a 90-day stay so that Brookstone’s clients could be notified and given an opportunity to obtain new counsel.

At the end of June 2016, the temporary restraining order, including the appointment of a receiver, was transformed into a preliminary injunction.

On July 22, 2016, the receiver, Citibank, and Bogden (representing herself) stipulated to stay the proceedings and continue the scheduled hearing on the motion to vacate, then currently set for August 10, 2016. They stipulated to stay the case for 90 days and continue the hearing for at least 180 days.

The parties assumed the stipulation would be approved. Indeed, on appeal, Citibank concedes that it “did not file an opposition [to the pending motion to vacate] because of the parties’ stipulation attempting to continue the hearing.”

23. The Court Denies the Stipulation and the Motion to Vacate

The court denied approval of the stipulation. It proceeded with the scheduled hearing on the motion to vacate and motion for leave to file an amended complaint on August 10, 2016. The only appearances were one plaintiff (not Bogden) in pro. per., and counsel for a non-Citibank defendant. There was no court reporter.

The minute order reads as follows: “Matter is called for hearing. [¶] Plaintiffs’ motion to vacate orders of dismissal is DENIED. Given that the first motion is denied, this case remains dismissed without prejudice and the accompanying motion to file a FAC is also DENIED. There is no basis for the court to stay this case as it was already dismissed in May 2015. The Stipulation for Stay of Proceedings submitted by the court appointed receiver is not signed.”

24. Bogden Appeals

Bogden filed timely a notice of appeal from the August 10, 2016 order, stating that she was appealing “from the final judgment and all orders that are separately appealable.”

DISCUSSION

On appeal, Bogden represents that she is appealing from: (1) the denial of the motion to vacate; (2) the denial of the motion for leave to file the first amended complaint; and (3) the failure of the court to hear and rule on Bogden’s section 286 motion. We need address only the first of these. We conclude that the motion to vacate was properly supported by Attorney Torchia’s declaration of fault and should have been granted.

Although Citibank disagrees substantively, it also raises multiple procedural challenges to this court even reaching the merits of the appeal. It argues: (1) the order denying the motion to vacate is not an appealable order; (2) the record is inadequate to enable appellate review because there is no reporter’s transcript of the August 10, 2016 hearing; and (3) Bogden forfeited the right to appeal by not attending the hearing on her motion to vacate. We will first consider, and reject, Citibank’s procedural challenges. We will then discuss the merits of the motion to vacate and conclude Attorney Torchia’s declaration was sufficient to mandate relief.

1. The Order Denying the Motion to Vacate is Appealable

Citibank’s first argument is that the court’s order denying the motion to vacate is not an appealable order.

“An order denying a motion to vacate a judgment or dismissal under section 473 is appealable . . . .” (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 611.) Citibank’s argument that Bogden may not appeal the order denying the motion to vacate under section 473 is based on the following rationale: The order denying a motion to vacate is a postjudgment order, which is only appealable if the underlying judgment is. But the underlying judgment in this case was a dismissal without prejudice. Being without prejudice, the dismissal is not a final appealable judgment.

Citibank is twice mistaken. While it is true that the denial of a motion to vacate is appealable as a postjudgment order under section 904.1, subdivision (a)(2), the denial of a statutory motion to vacate under section 473 may be appealable even when the underlying judgment is not. (Jackson v. Kaiser Foundation Hospitals, Inc.(2019) 32 Cal.App.5th 166, 169-170.)

As to the dismissal without prejudice in this case, it is, in fact, a final appealable judgment. The confusion appears to have arisen from the line of cases culminating in Kurwa v. Kislinger (2013) 57 Cal.4th 1097, in which the Supreme Court concluded that parties cannot create appealability, when a judgment does not dispose of all causes of action, by voluntarily dismissing the remaining causes of action without prejudice and stipulating to waive operation of the statute of limitations. (Id. at p. 1100.) Citibank apparently believes that the factor causing non-appealability in that scenario is that the dismissal is without prejudice. To the contrary, Kurwa expressly approved of Abatti v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650, 655, which held that the determinative factor was not whether the dismissal was without prejudice, but whether the parties waived the statute of limitations.

The Abatti court concluded “that claims that are dismissed without prejudice are no less final for purposes of the one final judgment rule than are adjudicated claims, unless . . . there is a stipulation between the parties that facilitates potential future litigation of the dismissed claims.” (Abatti, supra, 205 Cal.App.4th at p. 655.) “In our view, the theoretical possibility of future litigation of claims that have been dismissed without prejudice and without a stipulation does not render a judgment any less final than does the possibility of litigation of claims that may be asserted in the first instance on remand.” (Id. at p. 667.) In Kurwa, our Supreme Court agreed, observing that a dismissal without prejudice unaccompanied by a stipulation to waive the statute is, in fact, sufficiently final. (Kurwa, supra, 57 Cal.4th at pp. 1105-1106.)

In this case, the claims of all plaintiffs were involuntarily dismissed without prejudice. Nothing was preserved to facilitate future litigation. That dismissal is final and appealable, rendering the denial of the motion to vacate that dismissal an appealable postjudgment order.

2. The Record on Appeal is Sufficient to Enable Appellate Review

There was no reporter present at the hearing on the plaintiffs’ motion to vacate the dismissal in favor of Citibank. Citibank contends the absence of a reporter’s transcript is fatal to Bogden’s appeal.

Counsel has a duty to ensure that a court reporter is present at a hearing when counsel has reason to anticipate that what is said at the hearing may be pertinent to a subsequent appeal, and the failure to obtain a reporter can be tantamount to a waiver of the right to appeal. (In re Christina P. (1985) 175 Cal.App.3d 115, 129.) The absence of a reporter’s transcript is fatal to an appellate challenge to the sufficiency of the evidence; without a transcript, it is presumed that the unreported testimony would demonstrate the absence of error. (Estate of Fain (1999) 75 Cal.App.4th 973, 992.) But when our review is de novo, and the record contains the court’s written orders and all evidentiary materials germane to the motion, a record of the hearing is not necessary to resolve the appeal. (Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 933-934.)

Thus, to determine whether the record is adequate in the absence of a reporter’s transcript, we must turn to the standard of review of the denial of Bogden’s section 473 motion for mandatory relief due to attorney fault. If the prerequisites for relief are met, a trial court is without discretion to deny relief. Our review is de novo, unless the applicability of the provision turns on disputed facts. (Leader v. Health Industries of America, Inc., supra, 89 Cal.App.4th at p. 612.) Here, plaintiffs submitted a declaration of Attorney Torchia attesting to his neglect. Citibank submitted no evidence in opposition to the motion and, in fact, no opposition at all. Neither plaintiffs nor Citibank appeared at the hearing on the motion; thus, no evidence could have been introduced in connection with the motion at the hearing. As such, there are no disputed facts, and our review is de novo.[7] The absence of a reporter’s transcript does not prevent our review.

3. Bogden Did Not Forfeit Her Right to Appeal by Failing to Attend the Hearing

Relying on In re Aaron B. (1996) 46 Cal.App.4th 843, Citibank contends Bogden forfeited her right to appeal by not attending the hearing on the motion to vacate and objecting to the court’s ruling denying the motion. In re Aaron B. included the following language: “We recently have been deluged with similar cases in which the appellant raises issues on appeal without having appeared or made a record in the trial court. At the risk of sounding like a broken record, we again cite the general rule: `[A] party is precluded from urging on appeal any point not raised in the trial court. [Citation.] Any other rule would “`”permit a party to play fast and loose with the administration of justice by deliberately standing by without making an objection of which he is aware and thereby permitting the proceedings to go to a conclusion which he may acquiesce in, if favorable, and which he may avoid, if not.”‘ [Citations.]” [Citation.]’ [Citation.] Appellant failed to make court appearances below, failed to keep in contact with his attorney, failed to object to the challenged reports below, and failed to provide the trial court with evidence supporting his position. Consequently, he cannot raise the issue on appeal.” (Id. at p. 846.)

That is not this case. Initially, it was Bogden’s attorney who abandoned her; she was one of only a handful of plaintiffs who attempted to become involved and take action when she learned of the abandonment. As to her specific failure to attend the hearing on the motion to vacate, it is apparent that Bogden did not attend because she believed, as did Citibank, that the court accepted the parties’ stipulation to continue the hearing due to Brookstone’s receivership. This was not a party playing fast and loose with the administration of justice by deliberately standing by without objection. Instead, it was a party who chose not to attend a hearing all parties had stipulated to continue because the law firm which had brought the scheduled motion was barred by federal court injunction from pursuing it.

Having rejected Citibank’s procedural challenges, we turn to the merits of the appeal — whether the trial court should have granted Bogden’s motion to vacate the dismissal on the basis of attorney fault.

4. The Dismissal was the Proper Subject of a Motion to Vacate for Attorney Fault

Preliminarily, Citibank argues that mandatory relief under section 473, subdivision (b), should not apply to the type of dismissal entered in this case. In Leader v. Health Industries of America, Inc., supra, 89 Cal.App.4th at page 618, the court explained that mandatory relief for attorney fault does not apply to all dismissals. Instead, it is limited to dismissals which are comparable to defaults — those dismissals which occur because an attorney failed to oppose a dismissal motion. Thus, it does not apply to discretionary dismissals based on the failure to file an amended complaint after a demurrer has been sustained with leave to amend where “the dismissal was entered after a hearing on noticed motions that required the court to evaluate the reasons for delay in determining how to exercise its discretion.” (Id. at p. 621.) Citibank argues that relief should be precluded in this case under an extension of Leader.

We need not decide whether every dismissal without prejudice is the equivalent of a default judgment such that the trial court is required to grant relief under section 473, subdivision (b). Here, however, notwithstanding the language of its September 8, 2015 order that the dismissal was without prejudice, on August 10, 2016, the trial court denied the plaintiff’s request to file a first amended complaint, and the only possible basis for the denial of that motion was that plaintiff had failed to timely file an amended complaint after failing to oppose the demurrer. That is precisely the type of dismissal that mandatory relief for attorney default was intended to relieve. This was a dismissal which was the equivalent of a default; counsel did not oppose the dispositive motions. Case authority has established that Leader does not foreclose relief when a dismissal is entered for a failure to respond to a demurrer and to timely file an amended complaint. (Pagnini v. Union Bank, N.A. (2018) 28 Cal.App.5th 298, 306Younessi v. Woolf (2016) 244 Cal.App.4th 1137, 1148-1149.)

5. Attorney Torchia’s Declaration of Fault was Sufficient

Reviewing Attorney Torchia’s declaration and the undisputed procedural history de novo, it is difficult to conceive of a case more strongly calling out for relief for attorney fault. Citibank’s demurrer was sustained on the basis of misjoinder. Attorney Torchia had (with the exception of participation in the case management conference) disappeared from the case for a year, resulting in sanctions and a bench warrant. He had not opposed the demurrer, even though he possessed recent case authority holding that joinder was proper in a nearly identical mass-joinder case he had brought. He declared that his lack of opposition was due to depression and drinking to excess, and accepted full responsibility. As to the dismissal for failing to amend in the time period allotted, Attorney Torchia’s declaration was the same, except it added that, during the 10-day period to amend, he had been suspended from the practice of law, and failed to inform his clients of that fact. Perhaps Attorney Torchia did not die on the proverbial sword, but he certainly pointed the weapon in his own direction. In short, the declaration admits mistake and neglect.

The sole issue left for determination is whether “the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (§ 473, subd. (b).) Causation, for the purposes of a motion to vacate for attorney fault, is governed by the same standard of proximate cause as in the context of legal malpractice. (Milton v. Perceptual Development Corp. (1997) 53 Cal.App.4th 861, 867.) Thus, the attorney’s negligence need not be the only proximate cause, as long as there is causation in fact. (Ibid.) Citibank suggests that the attorney must be the sole cause; this is incorrect. There is authority that, to obtain relief, the attorney must be solely responsible, vis-à-vis the client, who must be innocent of wrongdoing.[8] (Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1251-1252.) Citibank cites no authority for the proposition that relief is not available when there may be causes, other than the client, in addition to the attorney’s fault. To the contrary, as long as the attorney is a proximate cause of the default or dismissal, relief is mandatory even when the client was simultaneously represented by a second attorney who took no action. (Milton, supra, at p. 867 & fn. 5.) Thus, Citibank’s argument that Attorney Mortimer’s presence in the case defeats causation is unavailing.

We are similarly not persuaded by Citibank’s argument that Attorney Torchia did not admit sole fault because he did not specifically admit receiving Citibank’s notice of ruling on the demurrer, stating instead that he did not recall when or if he received the notice. Even if there had been a problem with service, it would not make Attorney Torchia less culpable; his abandonment remained a proximate cause. In any event, Attorney Torchia’s declaration is not reasonably construed as asserting a service error. Instead, Attorney Torchia candidly admitted that he simply has no recollection of receiving the notice of ruling in the midst of his depression and heavy drinking.

Citibank also suggests that Attorney Torchia’s declaration is insufficient because Attorney Torchia stated that if he had received the notice of ruling and was not suspended or under the influence, he would have filed an amended complaint to properly address the joinder issue. Citibank argues that this is inadequate because filing an amended complaint to address the joinder issue would have, in fact, violated the trial court’s order, as the court granted leave for only one plaintiff to file an amended complaint. But it was Citibank’s notice of ruling which misstated that all plaintiffs had been granted leave to amend. If Attorney Torchia was mistaken about the court’s ruling in this respect, Citibank cannot be heard to complain about it.

6. Procedure on Remand

The trial court erred in denying the motion to vacate the dismissal. We therefore reverse the order and remand with directions that the court vacate the dismissal entered against Bogden and grant her reasonable leave to amend her complaint.

Citibank states that, if we conclude that Bogden is entitled to vacate the dismissal, “Bogden must pay Citi’s reasonable compensatory legal fees and costs [under section 473, subdivision (b)].” That section provides, “The court shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.” The plain language of the statute provides that the attorney, not the client, be directed to pay compensatory fees and costs. Any requests for fees and costs from Attorney Torchia should be directed, in the first instance, to the trial court.

DISPOSITION

The order denying Bogden’s motion to vacate the dismissal is reversed. The trial court shall enter a new and different order granting the motion to vacate the dismissal and allowing Bogden reasonable leave to amend her complaint. Citibank is to pay Bogden’s costs on appeal.

MOOR, J. and KIM, J., concurs.

[1] There were other defendants named in the action. In her brief on appeal, Bogden concedes that she is only pursuing Citibank.

[2] The non-Citibank defendants also successfully demurred on the merits. Again, these defendants are not parties to this appeal.

[3] The remainder of the quote referred to plaintiff Luevano, whose different treatment is of no further relevance to this appeal.

[4] All future undesignated statutory references are to the Code of Civil Procedure.

[5] There are specific rules governing a limited scope representation. California Rules of Court, rule 3.36(b) provides that once a party and attorney provide notice of limited scope representation, all papers must be served on both the attorney providing the limited scope representation and the client. A limited scope representation is not self-terminating; instead, if the client does not sign a substitution when the limited scope tasks are completed, rule 3.36 provides a means by which the limited scope attorney can be relieved by the court. No substitution out was ever filed, nor did Attorney Azar follow the rule 3.36 procedure to be relieved. For this reason, Citibank takes the position that Attorney Azar remained Bogden’s counsel of record long after his limited scope representation was completed, even though neither he nor Bogden believed he was still representing her.

[6] Whether Attorney Tarkowski believed himself to be representing all of the plaintiffs at this point, and whether he actually was, is somewhat unclear. He submitted a proposed order which included his representation that he “now plans to file an amended complaint on behalf of any Plaintiffs who would like a Brookstone attorney to continue to represent them, but given the recent history in this matter, and the fact that he is [a] new employee at Brookstone, has practiced for only one year and has limited experience in this area, he wants to provide full disclosure to the Court and the individual plaintiffs, and permit the individual plaintiffs sufficient time after that disclosure (sixty days) to either find alternative counsel, represent themselves, or consciously choose to have him represent them.” (Emphasis original.) At the next hearing, Attorney Tarkowski entered his appearance for all plaintiffs except Bogden, while Attorney Azar said that he believed Brookstone (and therefore, Attorney Tarkowski) also represented Bogden. The court stated that since Attorney Tarkowski had not substituted in, he was “like some sort of a third-party arriver here,” who lacked standing to appear in the case. The issue is not directly before us, although we note that the Brookstone firm never actually substituted out. Later, apparently in an effort to satisfy the court’s concerns, Attorney Tarkowski (on behalf of Brookstone) associated himself (again, on behalf of Brookstone) into the case.

[7] To the extent Citibank suggests that Adoption of Arthur M. (2007) 149 Cal.App.4th 704, 717 holds that we may use substantial evidence review even on uncontradicted evidence, Citibank’s statement of the case’s holding is correct, but inapplicable. Arthur M. was concerned with whether a baby’s father had failed to promptly assume his parental responsibilities. The father testified that he was afraid to come forward because he feared he would be prosecuted for rape. His testimony as to his belief itself was uncontradicted — obviously, nobody else could testify as to what he was thinking. But his testimony was not undisputed — the mother introduced a great deal of evidence showing by the father’s conduct that this was not, in fact, the reason that he failed to assume his obligations toward the child. The Court of Appeal held that the trial court had not been bound by uncontradicted testimony which was, in fact, disputed by other evidence. (Ibid.) Here, in contrast, there was no disputed evidence. De novo review applies.

[8] This is a disputed issue in the law. “[C]ourts are still divided as to whether [relief] is available when the error lies partly at the client’s feet and partly at the attorney’s [citations].” (Martin Potts & Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 442.)

 

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Unique Concerns When Foreclosing Junior Liens on Real Estate in Ohio

Unique Concerns When Foreclosing Junior Liens on Real Estate in Ohio

Lexology-

There has been some significant activity recently involving the rights and obligations of junior real estate lienorsin Ohio who file foreclosures to realize on real estate liens. The purpose of this post is to discuss that activity and remind lenders and their counsel of one important right of senior lenders that has not changed.

1. In December 2018 Governor Kasich signed an amendment to Ohio’s Residential Mortgage Lending Act. Inter alia, the change provides a new notice requirement for all actions to collect a debt secured by residential real property if the foreclosed lien is a second mortgage or junior lien. Titled Collecting debt on junior liens Ohio Revised Code Section 1349.72 now states in part:

  1. Before a person collecting a debt secured by residential real property collects or attempts to collect any part of the debt, the person shall first send written notice as described in division (B) of this section via United States mail to the residential address of the debtor, if both of the following apply:
    1. The debt is a second mortgage or junior lien on the debtor’s residential real property.
    2. The debt is in default.
  2. The written notice shall be printed in at least twelve-point type and state the following:
    1. The name and contact information of the person collecting the debt;
    2. The amount of the debt;
    3. A statement that the debtor has a right to an attorney;
    4. A statement that the debtor may qualify for debt relief under Chapter 7 or 13 of the United States Bankruptcy Code, 11 U.S.C. Chapter 7 or 13, as amended;
    5. A statement that a debtor that qualifies under Chapter 13 of the United States Bankruptcy Code may be able to protect their residential real property from foreclosure.
  3. Upon written request of the debtor, the owner of the debt shall provide a copy of the note and the loan history to the debtor. . . .. (bold added)

[LEXOLOGY]

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



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TFH 6/2 | Discovering Discovery: What Every Homeowner Needs To Know About How Enhanced Discovery Techniques Can Defeat Attempts at Foreclosure by Securitized Trusts

TFH 6/2 | Discovering Discovery: What Every Homeowner Needs To Know About How Enhanced Discovery Techniques Can Defeat Attempts at Foreclosure by Securitized Trusts

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

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

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

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Sunday – June 2, 2019

Discovering Discovery: What Every Homeowner Needs To Know About How Enhanced Discovery Techniques Can Defeat Attempts at Foreclosure by Securitized Trusts

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Securitized trust litigation has proven extremely difficult and overly expensive for homeowners in foreclosure.

Deterred and delayed by seemingly unknowledgeable judges and arrogantly uncooperative securitized trust attorneys, homeowners battling foreclosure too often find that seeking the truth regarding the otherwise hidden fraud being committed by securitized trusts resembles too often frustratingly trying to catch a greased pig.

Nevertheless, the law does provide effective methods
for securing the truth in litigation called “discovery,” which homeowners in foreclosure as well as most foreclosure defense attorneys have heretofore unfortunately largely neglected or improperly used.

Simply put, there is more to discovery than asking the other side for answers or documents. Effective discovery is a complex science of its own.

On today’s show John and I examine enhanced techniques for weaponizing discovery requests, providing our listeners exclusively with several dozen specific examples, time permitting.

Be with us this Sunday to discover discovery anew, and learn how enhanced discovery techniques, some relatively expensive and some relatively cheap, all however little known or little used, followed up by motions to compel if needed, could save your home from foreclosure and prevent eviction.

You cannot afford to miss this Sunday’s show.

Gary

———————

GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813
Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733
Email: gdubin@dubinlaw.net.

Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

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

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII 
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
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The Foreclosure Hour 12

image: Video Hive

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



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Senior citizen threatens to come back to his bank with a gun if they foreclose on his home

Senior citizen threatens to come back to his bank with a gun if they foreclose on his home

NY Daily News-

An 67-year-old man in a small town in Illinois told bank employees he would “bring a gun back” if they foreclosed on his house.

When police contacted the man asking that he not do so, he said he wouldn’t.

Identified only as a resident of Princeville, Ill., the senior citizen is accused of entering a bank in the 1.66-square-mile town at 10 a.m. on May 22, upset that that foreclosure procedures on his home were moving forward, according to the Peoria Journal Star.

[NY DAILY NEWS]

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