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

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

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

CRENSHAW, Judge.

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

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

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

Reversed and remanded.

CASANUEVA and KELLY, JJ., Concur.

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

IN THE DISTRICT COURT OF APPEAL

FIRST DISTRICT, STATE OF FLORIDA

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

CASE NO. 1D15-2401

LINDA G. MORGAN,

Appellant,

v.

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

AS TRUSTEE FOR THE
CERTIFICATEHOLDERS OF

CWALT 2400-25CB,

Appellee.

_____________________________/

Opinion filed June 28, 2016.

An appeal from the Circuit Court for Walton County.

William P. White, Jr., Judge.

Louis C. Arslanian, Hollywood, for Appellant.

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

B.L. THOMAS, J.

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

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

Background

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

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

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

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

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

Analysis

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

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

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

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

4

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

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

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

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

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

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

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

6

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

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

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

7

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

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

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

8

MAKAR, J., dissenting.

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

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

DAVID PAIVA,

Plaintiff,

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

THE BANK OF NEW YORK MELLON,
Defendant.

MEMORANDUM AND ORDER

August 11, 2015

BURROUGHS, D.J.

I. Background
Plaintiff David Paiva (“Paiva”) seeks to void the foreclosure sale of his home in
Massachusetts (the “Property”), conducted by Defendant Bank of New York Mellon
(“BONYM”) on April 28, 2014. BONYM, the lender at the time of the foreclosure sale, also
purchased the Property in foreclosure. Paiva, who has continued to live in the Property since the
foreclosure, has not made a mortgage payment since 2008 and does not dispute that he is in
default on the mortgage.
In his two-count complaint, Paiva alleges two independent grounds for voiding the
foreclosure sale. [Dkt. 1-4.] Count I alleges that the foreclosure did not strictly comply with
paragraph 22 of the mortgage because the notice of default required by that paragraph was sent
by the servicer of the loan, rather than by the lender. Paiva claims that this violated the statutory
power of sale under Massachusetts law, which requires a foreclosing bank to “comply with the
terms of the mortgage,” G.L. c. 183, § 21. Controlling case law requires strict compliance with
paragraph 22 of the mortgage, and Paiva argues that this standard was not satisfied by the loan
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2
servicer’s sending of the notice of default.
Count II alleges that BONYM failed to notify “the office of the assessor or collector of
taxes of the municipality in which the premises are located” within 30 days of conveying title, as
required by G.L. c. 244, § 15A (“§ 15A”). BONYM notified the tax collector by letter dated
February 12, 2015, more than nine months after the foreclosure sale. [Dkt. 20-1, Ex. 3.] Paiva
argues that § 15A is a “statute[] relating to the foreclosure of mortgages” pursuant to the
statutory power of sale, G.L. c. 183, § 21, and that, as with paragraph 22 of the mortgage, strict
compliance with § 15A is required. He further argues that the proper remedy under either count
of his complaint is to void the foreclosure.
In its counterclaim, BONYM alleges five counts, all of which turn on the validity of the
foreclosure. [Dkt. 8.] BONYM seeks a judgment for the difference between the total amount
owed by Paiva as of the date of the foreclosure sale and the sale price—a deficiency of
approximately $192,000.00. BONYM also seeks a judgment for possession and a writ of
assistance from the Court.
By agreement of the parties, Paiva and BONYM filed cross-motions for summary
judgment before conducting discovery in this case. Following careful consideration of the
parties’ briefs and further argument presented at a hearing conducted on August 6, 2015, the
Court concludes that there is no genuine dispute as to any material fact and that Paiva is entitled
to judgment as a matter of law on both counts of his complaint. The Court stated its reasons for
this ruling on the record at the hearing and supplements those reasons herein.
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3
II. Discussion
A. Legal Standard – Summary Judgment
Summary judgment is appropriate only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). A dispute is “genuine” if “the evidence is such that a reasonable jury could return a
verdict in favor of the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A “material” fact is one that “might affect the outcome of the suit under the governing
law.” Id. The moving party has the burden of proving that there is no genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
B. Count I: Alleged Failure to Comply with Paragraph 22 of the Mortgage
The parties’ briefs identify only one purportedly disputed fact in this case, which relates
to Count I of the complaint: the controlling date of an assignment of the mortgage from the
original lender, MERS as nominee for Countrywide Home Loan Inc. (“Countrywide”), to
BONYM. [Dkt. 22, ¶ 4.] The Court, however, finds that this is not a genuine issue of material
fact that would preclude summary judgment because at the hearing, BONYM acknowledged that
as of May 19, 2008—the date of Countrywide’s notice of default to Paiva—BONYM was the
lender and Countrywide was the servicer of the loan.1
Paragraph 22 of the mortgage sets forth, in relevant part, the following requirements for a
notice of default:
Lender shall give notice to Borrower prior to acceleration following Borrower’s
breach of any covenant or agreement in this Security Instrument . . . . The notice
shall specify: (a) the default; (b) the action required to cure the default; (c) a date,
not less than 30 days from the date the notice is given to Borrower, by which the
default must be cured; and (d) that failure to cure the default on or before the date
1 If Countrywide were still the lender as of May 19, 2008, then there would be no violation of the
requirement in paragraph 22 of the mortgage that the lender send the notice of default.
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4
specified in the notice may result in acceleration of the sums secured by this
Security Instrument and sale of the Property. The notice shall further inform
Borrower of the right to reinstate after acceleration and the right to bring a court
action to assert the non-existence of a default or any other defense of Borrower to
acceleration and sale. If the default is not cured on or before the date specified in
the notice, Lender at its option may require immediate payment in full of all sums
secured by this Security Instrument without further demand and may invoke the
STATUTORY POWER OF SALE and any other remedies permitted by Applicable
Law.
[Dkt. 19-1, ¶ 22.]
Paiva submits that Countrywide’s notice of default did not satisfy the requirements of
paragraph 22 of the mortgage, not because any of the required substance was missing from the
notice, but because the notice should have come from BONYM as the lender, rather than from
Countrywide as the servicer of the loan. BONYM responds that the word “Lender” in paragraph
22 should be read to include the servicer of the loan, and thus, the fact that Countrywide sent the
notice of default to Paiva did, in fact, comply with the requirement that “Lender shall give notice
to Borrower” of the default and action required to cure the default. [Dkt. 19-1, ¶ 22 (emphasis
added).]
The language of paragraph 22 is clear and unequivocal as to who must give the required
notice of default to the borrower: “Lender” must do so. The Court agrees with Paiva that
Countrywide’s notice of default did not strictly comply with paragraph 22 of the mortgage, as
required under the statutory power of sale and under the Massachusetts Supreme Judicial Court’s
(“SJC”) case law. See G.L. c. 183, § 21 (requiring a foreclosing bank to “comply with the terms
of the mortgage”); U.S. Bank Nat. Ass’n v. Ibanez, 458 Mass. 637, 647 (2011) (the terms of the
power of sale, G.L. c. 183, § 21, must be strictly adhered to); see also Pinti v. Emigrant
Mortgage Company, Inc., 33 N.E.3d 1213, 1226 (2015) (strict compliance with the notice of
default required by paragraph 22 is necessary in order for a foreclosure sale to be valid).
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5
Paragraph 22 specifically states that “Lender shall give notice to Borrower . . . .” Significantly, it
does not say that “Lender or the servicer of the loan shall give notice to Borrower . . . .” Nor is
the term “Lender” defined in the mortgage to include the servicer of the loan. Rather, the
mortgage defines “Lender” only as “Countrywide Home Loans, Inc.” [Dkt. 19-1, at 6.] As
discussed above, although Countrywide was the original lender under the mortgage, the parties
agree that by the time Countrywide sent the notice of default to Paiva, Countrywide had assigned
its interest to BONYM, which thereby became the lender. Thus, strictly construing paragraph 22
of the mortgage, BONYM, and not Countryside, had to send the notice of default to Paiva.
Further, this approach is consistent with the SJC’s recent decision in Pinti, which held
that a foreclosing bank’s “strict compliance with the notice of default required by paragraph 22
was necessary in order for the foreclosure sale to be valid,” and that the bank’s “failure to strictly
comply rendered the sale void.” 33 N.E.3d at 1226. The Court cites Pinti despite the SJC’s
decision to give it only prospective effect. Id. at 1227. Given that BONYM purchased the
Property in foreclosure, and that the Property has not changed hands to any third parties, the
SJC’s concern over the “possible impact that our decision may have on the validity of titles” is
attenuated here. Additionally, the cross-motions for summary judgment were fully briefed before
Pinti was issued on July 17, 2015. As Paiva was already advancing the same argument regarding
strict compliance with the paragraph 22 requirements that the SJC adopted in Pinti, it would be
inequitable to deny him the benefit of that decision. Further, the Court reads Pinti as a statutory
interpretation of the power of sale, G.L. c. 183, § 21, and an extension of the SJC’s prior ruling
in Ibanez, rather than a reversal of course.
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6
Because the Court finds that Countrywide’s notice of default did not strictly comply with
the requirements of paragraph 22 of the mortgage, the foreclosure sale is void.2
C. Count II: Failure to Comply with G.L. c. 244, § 15A
There are no disputed facts pertaining to Count II of the complaint. The parties agree that
BONYM did not strictly comply with § 15A, which requires a foreclosing bank to notify the tax
collector (among other third parties) of a foreclosure sale within 30 days of conveying title. G.L.
c. 244, § 15A. Here, BONYM did not make the required notification until more than nine months
after the foreclosure sale. [Dkt. 20-1, Ex. 3.] Paiva argues that this lapse invalidates the
foreclosure. BONYM responds that it does not because, in its view, § 15A is not among the
“statutes relating to the foreclosure of mortgages” pursuant to the statutory power of sale, G.L. c.
183, § 21, with which strict compliance is required for a foreclosure to be valid, largely because
the notification under § 15A isn’t required until after the foreclosure is complete.
The Court concludes that under several SJC decisions, strict compliance with § 15A is
required, and the consequence of non-compliance is the invalidation of the foreclosure sale. See
U.S. Bank Nat. Ass’n v. Schumacher, 467 Mass. 421, 432 (Gants, J., concurring) (“Where a
2 In reaching its conclusion that the notice of default did not strictly comply with the paragraph 22
requirements, the Court declines to follow the unreported holding in Federal National Mortgage
Association v. Rogers, No. 13-ADMS-10025, 2015 WL 2000845 (Mass. App. Div. Apr. 7, 2015). In
Rogers, the appellate division for the state district court held that a mortgage servicer’s sending of a
notice to cure satisfied the requirements of paragraph 22 of the mortgage. However, Rogers pre-dated, by
several months, the SJC’s decision in Pinti, in which the SJC mandated strict compliance with the notice
of default required by paragraph 22. It is not at all clear that the appellate division in Rogers applied the
same standard of strict compliance that was announced in Pinti. For example, the court in Rogers
explained that “[t]he obvious purpose of . . . paragraph 22 of the mortgage . . . is to allow the borrower
opportunity to cure default and avoid foreclosure. . . . This purpose was fulfilled by the loan servicer,
which was acting on behalf of the mortgagee, giving Rogers the required information.” 2015 WL
2000845, at *4 (emphasis added). Thus, the court in Rogers appears to have focused more on the purpose
of paragraph 22 than on its strict requirements. To the extent that Rogers applied a standard other than
strict compliance, that decision is at odds with Pinti, as well as with the clear language of the mortgage in
the instant case, and the Court therefore declines to follow Rogers.
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7
defendant in the summary process action claims that the mortgage holder failed strictly to adhere
to the requirements under the statutory power of sale set forth in G.L. c. 183, § 21, and the
related requirements in G.L. c. 244, §§ 11-17C, proof of any violation of these requirements will
void the foreclosure sale and, therefore, defeat the eviction.”) (emphasis in original); see also
Pinti, 33 N.E.3d at 1224; Eaton v. Fed. Nat. Mortgage Ass’n, 462 Mass. 569, 581 (2012);
Ibanez, 458 Mass. at 646. BONYM points to no contrary case or other authority for the
proposition that strict compliance with the requirements of § 15A is not required, and the Court
is not aware of any such authority. Further, the language of § 15A itself supports the holding that
it is a “statute[] relating to the foreclosure of mortgages” with which strict compliance is
required. Section 15A employs the mandatory language “shall,” corresponds to a particular
property (namely, the “mortgaged premises”), and sets a specific deadline of 30 days for
compliance. G.L. c. 244, § 15A.3
3 At the hearing, BONYM pointed out that there are a number of provisions within G.L. c. 244, §§ 11-
17C (the range of statutes cited by Justice Gants in his concurring opinion in Schumacher), where noncompliance
clearly could not void an individual foreclosure. For example, G.L. c. 244, § 14A, requires
the commissioner of the division of banks to maintain a foreclosure database to be used to generate an
annual report. It does not seem likely that a failure to maintain the database or to produce the annual
report would be construed as a “strict compliance” failure that would require the invalidation of an
otherwise proper foreclosure. See also G.L. c. 244, § 17A (establishing a two-year limitations period for
certain actions relating to foreclosure sales). BONYM reconciles these sorts of provisions and Justice
Gants’s language regarding strict compliance by pointing to his use of the words “related requirements”
and arguing that strict compliance is only required with regard to those portions of G.L. c. 244, §§ 11-
17C, that are “related” to the statutory power of sale set forth in G.L. c. 183, § 21. Even assuming,
arguendo, that BONYM is correct that Justice Gants did not mean to require strict compliance with every
provision within G.L. c. 244, §§ 11-17C, it would still be left to this Court to determine whether § 15A is
“related” to the statutory power of sale and therefore must be strictly adhered to for a valid foreclosure.
The Court concludes, given the absolute nature of the language used by Justice Gants, the mandatory
language of § 15A (“shall”), the fact that § 15A is specific to each individual foreclosure rather than a
more general directive such as the requirement to maintain a database, and the fact that § 15A sets forth a
specific deadline of 30 days, that, at least until further guidance from the state courts, strict adherence
with § 15A is required.
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8
All of this being said, the Court acknowledges the apparent unfairness to BONYM of
voiding the foreclosure sale, given that Paiva has now been living in the Property for many years
without making any payments on his mortgage. Under the relevant Massachusetts statutes and
case law governing foreclosure sales, however, this result is mandated by BONYM’s failure to
strictly comply with the pre-foreclosure notice of default required by paragraph 22 of the
mortgage and the post-foreclosure notice to the tax collector required by G.L. c. 244, § 15A.
III. Conclusion
For the above reasons, BONYM’s Motion for Summary Judgment [Dkt. 16] is DENIED,
and Paiva’s Cross-Motion for Summary Judgment [Dkt. 21] is GRANTED. The Clerk is directed
to enter judgment for Paiva pursuant to Fed. R. Civ. P. 58(a) on both counts of his complaint and
to close this action. The foreclosure sale is void for the reasons discussed in this opinion and at
the hearing. As Paiva has not demonstrated that any additional relief is warranted, however, his
request for damages, costs, interest, and attorney fees, is denied.

SO ORDERED.

Dated: August 11, 2015

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

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

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

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

v.

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

No. 4D15-630

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

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

ON CONCESSION OF ERROR
PER CURIAM.

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

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

H/T CORONA LAW FIRM

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

JORGE SOSA and JEANETTE SOSA,

Appellants,

v.

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

Appellee.

No. 4D14-810

[March 23, 2016]

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

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

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

DAMOORGIAN, J.

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

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

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

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

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

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

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

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

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

Reversed and remanded.

MAY and GERBER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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

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

DAMOORGIAN, J.

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

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

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

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

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

Id. at 507 n.4.

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

Reversed.

TAYLOR and GERBER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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

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

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

CONNER, J.

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

Factual Background and Trial Court Proceedings

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

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

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

Appellate Analysis

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

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

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

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

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

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

Reversed and remanded.

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

Not final until disposition of timely filed motion for rehearing.

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

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

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

• JP Morgan Chase Bank; and

• JP Morgan Chase & Co.

Two others are:

• Bank of New York Company, Inc.; and

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

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

At bar, the plaintiff is:

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

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

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

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

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

(1) evidence of an effective transfer;

(2) proof of purchase of the debt; or

(3) evidence of a valid assignment.

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

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

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

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

Id. at 978 (emphasis added).

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

Affirmed.

FOOTNOTES

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

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

STEVENSON, J.

WARNER and FORST, JJ., concur.

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

View original: From the court   |   Our backup

. . .

Charles and Carolyn Amstone appeal the final summary judgment of

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

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

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

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

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

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

further proceedings.

H/T Gary Dubin

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

v.

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

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

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

OPINION OF THE COURT BY FOLEY, J.

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

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

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

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

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

I. BACKGROUND^[4]

[FOFs]

. . . .

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

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

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

. . . .

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

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

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

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

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

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

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

II. STANDARD OF REVIEW

A. Discovery

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

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

B. Summary Judgment

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

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

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

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

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

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

III. DISCUSSION

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

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

Dermabelle argues on appeal:

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

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

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

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

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

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

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

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

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

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

IV. CONCLUSION

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

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

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

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

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

[2] The Honorable Bert I. Ayabe presided.

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

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

[5] HRCP Rule 26 provides in relevant part:

Rule 26. GENERAL PROVISIONS GOVERNING DISCOVERY.

. . . .

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

(1) IN GENERAL.

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

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

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

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

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

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

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

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

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

Tran v. Bank of New York

COMMENTARY

COMMENTARY Mortgage Securitization and Lender’s Ability to Foreclose

However, a simple “yes” answer to the question would ignore

recent case law concerning whether a borrower in a foreclosure

action can assert defenses founded upon alleged non-compliance

with documents governing the securitization of the underlying loan

—e. g., pooling and servicing agreements.

COMMENTARY Row Over Mortgage Transfers To MBS Trusts Hits High Court – Law360

Law360, New York (September 8, 2015, 8:33 PM ET) — Property owners have

asked the U.S. Supreme Court to review their suit against several banks, saying

the Second Circuit did not appropriately determine whether they had standing to

claim that mortgage-backed securities trusts managed by the banks did not own

the petitioners’ mortgages. (SEE Concurrent email for article. Link may not open.)

APPELLATE FILINGS

.

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

Supreme Court of Florida
____________
No. SC14-1049
____________

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

vs.

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

[September 17, 2015]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It is so ordered.

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

LEWIS, J., dissents with an opinion.

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

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR GUARANTY BANK
Plaintiff,

-against-

THE BANK OF NEW YORK MELLON,
Defendant.

NATURE OF ACTION

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

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

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

[…]

Federal Reserve Bank of New York
Staff Reports

Determinants of Mortgage Default and
Consumer Credit Use: The Effects of
Foreclosure Laws and Foreclosure Delays

Sewin Chan
Andrew Haughwout
Andrew Hayashi
Wilbert van der Klaauw

Staff Report No. 732

June 2015

This paper presents preliminary findings and is being distributed to economists
and other interested readers solely to stimulate discussion and elicit comments.
The views expressed in this paper are those of the authors and do not necessarily
reflect the position of the Federal Reserve Bank of New York or the Federal
Reserve System. Any errors or omissions are the responsibility of the authors.

Abstract

The mortgage default decision is part of a complex household credit management problem. We
examine how factors affecting mortgage default spill over to other credit markets. As home
equity turns negative, homeowners default on mortgages and HELOCs at higher rates, whereas
they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the
preservation of credit cards over housing debt. Although mortgage non-recourse statutes increase
default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase
default rates for both housing and non-housing debts. Our analysis highlights the
interconnectedness of debt repayment decisions.

[…]

H/T Court Listener

IN THE
COURT OF APPEALS OF INDIANA

Demetrius L. Grant, and April 6, 2015
Vickie O. Grant Court of Appeals Case No.
49A05-1404-MF-139
Appellant-Defendant,
Appeal from the Madison Superior
v. Court
Honorable Michael D. Keele, Special
Judge
The Bank of New York Mellon Case No. 49D07-1006-MF-028352
Trust Co.,
Appellee-Plaintiff

Friedlander, Judge.

[1] Demetrius and Vickie Grant appeal the trial court’s denial of their motion to

dismiss and grant of summary judgment in favor of The Bank of New York

Mellon Trust Company (the Bank). The Grants present the following

dispositive issue for review: Was dismissal of the Bank’s second foreclosure

action against the Grants required where the first action was dismissed under

Indiana Trial Rule 41(E)?
Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 1 of 9
[2] We reverse and remand.

[3] The Grants have lived in their Indianapolis home for over thirty years. On

January 28, 2004, they executed a note in the principal amount of $127,500

with Paragon Home Lending, LLC. To secure payment of the note, the Grants

executed a mortgage. At some point, the mortgage and note were assigned to

the Bank.

[4] The Grants filed bankruptcy in 2007, and the bankruptcy court granted them

discharge from the mortgage debt that same year. Thereafter, the Grants did

not make their August 2007 mortgage payment or any subsequent payments.

[5] On November 26, 2007, the Bank filed an In Rem Complaint on Note and to

Foreclose Mortgage and Reformation of Mortgage and Deed (the First

Foreclosure Action). The Bank took no action on the complaint for over a year

and a half, so Judge S.K. Reid of the Superior Court of Marion County set the

cause for call of the docket on July 29, 2009. Demetrius Grant appeared for the

hearing, but the Bank did not. Accordingly, Judge Reid dismissed the cause

pursuant to T.R. 41(E) for failure to prosecute.

[6] Eight months later, on March 29, 2010, the Bank filed a motion to reinstate the

First Foreclosure Action, which the court initially granted. Upon the Grants’

motion, Judge Reid returned the case to disposed status on April 23, 2010,

citing Natare Corp. v. Cardinal Accounts, Inc.,

874 N.E.2d 1055

(Ind. Ct. App.

2007) (reversing reinstatement where plaintiff filed an unverified motion with

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 no supporting affidavits and presented no admissible evidence at the hearing on

the reinstatement motion). The Bank did not appeal this ruling.

[7] Two months after unsuccessfully attempting to reinstate the First Foreclosure

Action, the Bank filed a new lawsuit against the Grants asserting the same

allegations and seeking the same relief (the Second Foreclosure Action). The

Grants subsequently filed a motion to dismiss, invoking as its basis Indiana

Trial Rule 12(B)(6). In their pro-se motion, the Grants argued that the First

Foreclosure Action had been dismissed for failure to prosecute and could not be

reinstated in this separate action. In opposition, the Bank argued in part that

despite the T.R. 41(E) dismissal, it was allowed to refile a separate action in the

future. The Grants replied that the motion to dismiss was proper under T.R. 41

and that “the bank [sic] attempt to refile this lawsuit is barred by the doctrine of

res judicata”. Appellants’ Appendix at 68. Following a hearing, the trial court

denied the Grants’ motion to dismiss. The Grants appealed the denial, but this

court dismissed the appeal because it was not from a final appealable order and

the Grants had not sought certification of the interlocutory order. Grant v. Bank

of New York, Cause No. 49A02-1104-MF-485 (March 22, 2012).

[8] After dismissal of the appeal, nothing happened in the case for several months

and the trial court issued a call of the docket notice to the parties in November

2012. The Bank sought leave to amend its complaint in February 2013, which

the trial court granted after a T.R. 41(E) hearing. The amendment, filed March

7, 2013, added the State as a party defendant and changed one date. The

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 Grants then sought a change of judge, which was granted, and Special Judge

Michael Keele was appointed.

[9] On July 10, 2013, the Bank filed a motion for summary judgment. In their

memorandum in opposition to summary judgment, the Grants noted the T.R.

41(E) dismissal of the First Foreclosure Action and that the case was not

reinstated pursuant to T.R. 41(F). The Grants further developed their T.R. 41

argument in a supplemental response, which they urged should be treated as a

belated motion to dismiss under T.R. 12(B)(8).

[10] The trial court held a summary judgment hearing on January 23, 2014. At the

conclusion of the hearing, the court directed the Bank to file a response to the

Grants’ T.R. 12(B)(8) motion. In its written response, the Bank’s sole argument

was that T.R. 41(F) does not require a party to petition the original court to

reinstate a case following dismissal for failure to prosecute. The Bank asserted,

without citing any authority, “[a] Plaintiff is well-within its rights to instead re-

file the Complaint at any time of its choosing.” Appellants’ Appendix at 330.

[11] On March 26, 2014, the trial court summarily denied the Grants’ motion to

dismiss. The court also entered a separate order for In Rem Entry of Summary

Judgment and Decree of Foreclosure in favor of the Bank. The Grants now

appeal.

[12] In support of their argument, the Grants direct us to Zavodnik v. Richards,

984 N.E.2d 699

(Ind. Ct. App. 2013), aff’d on reh’g,

988 N.E.2d 806

(Ind. Ct. App.

2013), a case with procedural facts almost identical to those at hand. In

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 Zavodnik, the plaintiff’s complaint was dismissed under T.R. 41(E) for failure to

prosecute and the plaintiff unsuccessfully attempted to reinstate the original

lawsuit pursuant to T.R. 41(F). The plaintiff then filed a new lawsuit with

allegations nearly identical to those of the originally-dismissed complaint. The

new court granted the defendant’s motion to dismiss.1

[13] The defendant argued that the filing of an entirely new complaint in a different

court contravened T.R. 41(E) and (F) and that the plaintiff should not be

allowed to avoid the rule’s reinstatement requirement simply by filing a new

complaint before a different judge.

[14] Subsections (E) and (F) of T.R. 41 provide:

(E) Failure to prosecute civil actions or comply with rules.
Whenever there has been a failure to comply with these rules or when
no action has been taken in a civil case for a period of sixty [60] days,
the court, on motion of a party or on its own motion shall order a
hearing for the purpose of dismissing such case. The court shall enter
an order of dismissal at plaintiff’s costs if the plaintiff shall not show
sufficient cause at or before such hearing. Dismissal may be withheld
or reinstatement of dismissal may be made subject to the condition
that the plaintiff comply with these rules and diligently prosecute the
action and upon such terms that the court in its discretion determines
to be necessary to assure such diligent prosecution.
(F) Reinstatement following dismissal. For good cause shown and
within a reasonable time the court may set aside a dismissal without
prejudice. A dismissal with prejudice may be set aside by the court for
the grounds and in accordance with the provisions of Rule 60(B).

1
The trial court in Zavodnik also sua sponte dismissed, on the same grounds, another complaint involving
two other defendants.

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 Thus, “when a trial court has involuntarily dismissed a case without prejudice

pursuant to Trial Rule 41(E), subsection (F) of that rule ascribes to the

dismissing trial court the discretion to consider whether a complaint should be

reinstated.” Zavodnik v. Richards, 984 N.E.2d at 703.

[15] In holding that the plaintiff’s only remedy was to obtain reinstatement of his

first complaint under its original cause number, we explained:

We [] presume that the Indiana Supreme Court, in drafting Trial Rule
41, did not intend to place a nullity in the rule by adding subsection
(F)’s explicit procedure for how to go about reinstatement of a
complaint dismissed without prejudice. Zavodnik’s position, that such
complaints can be re-filed in a different court without following the
reinstatement procedure, would render that provision meaningless. By
re-filing complaints before Judge Dreyer that were substantially
similar, if not identical, to complaints that Judge Oakes had already
dismissed, Zavodnik was improperly attempting to circumvent Judge
Oakes’s authority and discretion to decide whether Zavodnik had good
cause to reinstate his original complaint(s). Judge Dreyer apparently
recognized this and acted properly in dismissing the re-filed
complaints, which dismissal served the interests of fairness to litigants,
judicial comity, and judicial efficiency.
Id. On rehearing, we reiterated, “if Zavodnik is unsuccessful in having his

original complaints reinstated, he may not circumvent that ruling by filing

entirely new complaints raising identical legal and factual issues as the original

complaints.” Zavodnik v. Richards, 988 N.E.2d at 807-08.

[16] In this appeal, the Bank makes no attempt to distinguish Zavodnik and, in fact,

does not even cite the case. The Bank, rather, relies on two arguments in an

attempt to avoid the clear mandate of Zavodnik: (1) the First Foreclosure Action

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 and the Second Foreclosure Action are not the same because they seek different

relief and (2) the Grants waived their T.R. 41 argument.

[17] Before addressing these arguments, we observe one key difference between this

case and Zavodnik. The latter was dismissed without prejudice, while the

present was dismissed with prejudice.2 In Zavodnik, we reached the T.R. 41(F)

analysis only after observing that the T.R. 41(E) dismissal without prejudice had

no res judicata effect. The same cannot be said for a dismissal with prejudice,

such as in the case at hand. See Afolabi v. Atl. Mortgage & Inv. Corp.,

849 N.E.2d 1170

, 1173 (Ind. Ct. App. 2006) (“a dismissal with prejudice is conclusive of the

rights of the parties and is res judicata as to any questions that might have been

litigated”).

[18] In any case, however, we must address the Bank’s assertion that the two actions

are not the same. Citing Afolabi, the Bank argues that the Grants’ obligations

under the note and mortgage were ongoing and any subsequent default created

a new and independent right to initiate foreclosure. The Bank continues, “[t]he

Second Action seeks relief for defaults that could not have been contemplated

by the First Action because the Second Action sought to recover amounts based

2
T.R. 41(B) provides in relevant part as follows: “Unless the court in its order for dismissal otherwise
specifies, a dismissal under this subdivision or subdivision (E) of this rule…operates as an adjudication upon
the merits.” In this case, because Judge Reid did not otherwise specify, the dismissal of the First Foreclosure
Action was with prejudice.

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 7 of 9
 on defaults that had accrued only after the dismissal of the First Action.”

Appellant’s Brief at 13.

[19] The Bank’s argument ignores the undisputed fact that the Grants’ personal

liability under the note and mortgage had been discharged in bankruptcy.

Accordingly, the relief sought in both foreclosure actions was precisely the same

and the First Foreclosure Action fully contemplated nonpayment due to the

bankruptcy. A review of the respective complaints, in fact, reveals that they

were based on the same alleged default. Cf. Afolabi v. Atl. Mortgage & Inv. Corp.,

849 N.E.2d at 1175 (“the facts necessary to establish a default in the first

foreclosure action are different from the facts necessary to establish a default in

the second foreclosure action”); Deutsche Bank Nat’l Trust Co. v. Harris,

985 N.E.2d 804

, 816 (Ind. Ct. App. 2013) (“subsequent and separate alleged

defaults under the note create a new and independent right in the mortgagee to

accelerate payment on the note in a subsequent foreclosure action”).

Unsatisfied with Judge Reid’s refusal to reinstate the First Foreclosure Action

and apparently unwilling to appeal that ruling, the Bank chose to re-institute the

exact same claim in a new lawsuit. This was improper.

[20] Finally, we turn to the Bank’s claim that the Grants have waived their T.R. 41

argument. From the beginning of this cause, the Grants have insisted (on

various grounds) that the Bank could not refile a new lawsuit to avoid dismissal

of the First Foreclosure Action. This issue was litigated on res judicata grounds

as a result of the Grants’ T.R. 12(b)(6) motion to dismiss filed in 2010. The

Grants raised the issue again in 2013 in response to the Bank’s summary

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 judgment motion, invoking T.R. 12(b)(8) and T.R. 41(F). At the summary

judgment hearing, the issue was once again litigated and the trial court

expressly requested that the Bank file a written response to the Grants’

arguments. In its written opposition to the motion to dismiss, the Bank

addressed the merits of the T.R. 41 issue and did not argue waiver. On the

record before us, we find the Bank’s belated waiver argument disingenuous and

without merit.3

[21] The Bank improperly attempted to circumvent Judge Reid’s T.R. 41 ruling by

filing an entirely new complaint raising identical legal and factual issues. This

violated both T.R. 41 and principles of res judicata. Accordingly, the trial court

erred when it granted summary judgment in favor of the Bank. The trial court

is directed on remand to vacate the grant of summary judgment and dismiss the

Bank’s complaint.

[22] Judgment reversed and cause remanded with instructions.

Kirsch, J., and Crone, J. concur.

3
In support of its waiver argument, the Bank relies on a number of cases applying Indiana Appellate Rule
46(C), which provides that no new issues shall be raised in a reply brief. This rule applies to appellate briefs
and, of course, has no applicability to trial court filings. We are perplexed by the Bank’s reliance on these
cases with respect the Grants’ summary judgment filings.

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 9 of 9

View original: From the court   |   Our backup

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

SUSAN LLOYD and JAMES LLOYD,
Appellants,

v.

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, as Trustee for the Certificate Holders of CWABS, INC., Asset-Backed Certificates, Series 2006-6,
Appellee.

No. 4D13-3799

[March 25, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Kenneth D. Stern, Judge; L.T. Case No. 502009CA 032165AW.

Bonnie S. Satterfield, Coral Springs, for appellants.
David W. Rodstein of Padula Hodkin, PLLC, Boca Raton, for appellee.

KLINGENSMITH, J.

Susan and James Lloyd (“Defendants”) executed a mortgage agreement and a promissory note with ACCU Funding Corporation (“ACCU”) for a loan, but later defaulted on their mortgage by failing to make any payments. The Bank of New York Mellon f/k/a The Bank of New York, as Trustee for the Certificate Holders of CWABS Inc., Asset-Backed Certificates, Series 2006-6 (“Plaintiff”) filed its complaint against Defendants containing one count for foreclosure of the mortgage and one count to enforce a lost instrument. Defendants claim the Plaintiff failed to prove standing to bring this action. We agree.

A copy of the mortgage agreement between Defendants and ACCU was attached to the complaint, along with a copy of the promissory note bearing an undated blank endorsement from ACCU. Before trial, the Plaintiff filed the original promissory note with the court. The endorsement in blank on the version of the note filed with the initial complaint was altered on the second version of the note, to reflect an endorsement from ACCU to Countrywide Bank, N.A.1

Along with the original note, Plaintiff filed an assignment of mortgage from ACCU to Plaintiff dated one month after suit was filed, although the document also stated that the assignment was intended to “relate back” to the month preceding Plaintiff’s filing of the initial complaint. The trial court ruled that Plaintiff had standing to file the lawsuit, and entered a final judgment of foreclosure in favor of Plaintiff. We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo. Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA 2014).

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.” See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). Standing must exist at the time the foreclosure suit is filed. Id.; see also Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1276 (Fla. 4th DCA 2013); GMAC Mortg., LLC v. Choengkroy, 98 So. 3d 781, 781 (Fla. 4th DCA 2012). A plaintiff may satisfy this burden by submitting “the note bearing a special endorsement in favor of the plaintiff, an assignment from payee to the plaintiff or an affidavit of ownership proving its status as holder of the note.” Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012).

When a plaintiff asserts standing based on an undated endorsement of the note, it must show that the endorsement occurred before the filing of the complaint through additional evidence, such as the testimony of a litigation analyst. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla. 4th DCA 2014). In Sosa, this court held the bank failed to establish standing, because its litigation analyst did not clearly testify as to when the bank became the owner of the note. Id. at 951-52. Where a later-filed promissory note does not include the date upon which the endorsement was made, the plaintiff must provide “record evidence proving that it had the right to enforce the note on the date the complaint was filed.” McLean, 79 So. 3d at 174.

1 Where the endorsement on the promissory note attached to the initial complaint had nothing written on the “pay to the order of” line, that space on the original note contained a “Countrywide Bank, N.A.” stamp. None of the endorsements on either version of the note were dated, and there is no other information in the record that sheds any light on when these endorsements were made.

Here, Plaintiff called a witness who testified that while assignments do not always strictly occur on the dates shown on the document, he was unable to say whether the note attached to the initial complaint was the most recent copy of that document, and could only assume that was the case. He also did not provide any information definitively establishing that Plaintiff had possession of the note prior to the time it filed its initial complaint. As a result, Plaintiff was unable to prove it had “standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint.” Joseph v. BAC Home Loans Servicing, LP, No. 4D12-4137, 2015 WL 71842, at *1 (Fla. 4th DCA Jan. 7, 2015) (emphasis added) (citing McLean, 79 So. 3d at 173).

Plaintiff’s evidence supporting its claim that the assignment of the mortgage “related back” to before the suit commenced was also insufficient to prove standing in this case. The witness testified that he did not have any information, other than the document itself, to verify when the assignment took place. In situations where mortgage assignments have been back-dated to pre-date the filing of the initial complaint, this court has stated that:

[T]wo inferences can be drawn from the effective date language. One could infer that ownership of the note and mortgage were equitably transferred [on the earlier date], but one could also infer that the parties to the transfer were attempting to backdate an event to their benefit. Because the language yields two possible inferences, proof is needed as to the meaning of the language, and a disputed fact exists.
Vidal, 104 So. 3d at 1277 (footnote omitted).

As such, “[a]llowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.” Id. at 1277 n.1.

Because neither the information included in the record nor the witness’s testimony resolved the issue of when the assignments to the Plaintiff occurred, it cannot be said that the assignment of the note and the mortgage took place “prior to instituting the complaint.” Joseph, 2015 WL 71842, at *1 (citing McLean, 79 So. 3d at 173). Since the trial court’s conclusion that Plaintiff had standing to foreclose is not supported by competent substantial evidence, we hereby reverse the final judgment of foreclosure entered in favor of Plaintiff, and remand this case to the trial court for entry of a judgment in favor of the Defendants. De Groot v.

Sheffield, 95 So. 2d 912, 916 (Fla. 1957) (stating that “the evidence relied upon to sustain the ultimate finding should be sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached”).

Reversed and Remanded with instructions.

GROSS and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

The Bank of New York Mellon, fka The Bank of New York, as Trustee for CWABS, Inc. Asset-Backed Certificates, Series 2007-13, Plaintiff-Respondent-Petitioner,
v.
Shirley T. Carson, Defendant-Appellant,
Bayfield Financial LLC and Collins Financial Services, Defendants.

For the defendant-appellant, there was a brief by April A.G. Hartman, Jeffrey R. Myer, and Legal Action of Wisconsin, Inc. Oral argument by April A.G. Hartman.

An amicus curiae brief by Grant F. Langley city attorney; Danielle M. Bergner, deputy city attorney; and Kail J. Decker, assistant city attorney, on behalf of the City of Milwaukee.

An amicus curiae brief by Catherine M. Doyle, Amanda E. Adrian, and Legal Aid Society of Milwaukee, Inc., on behalf of the Legal Aid Society of Milwaukee.

PROSSER, ZIEGLER, GABLEMAN, JJJ., concur.

ANN WALSH BRADLEY, J.

¶1 Petitioner, Bank of New York Mellon (“the Bank”), seeks review of a published decision of the court of appeals that reversed the circuit court’s denial of Shirley Carson’s motion to amend a judgment of foreclosure on her former home.^[1] She requested that the court find the property to be abandoned and that it order a sale of the property upon expiration of five weeks from the date of entry of the amended judgment. The court of appeals concluded that the circuit court erroneously determined that it was without authority to grant the motion.

¶2 The Bank asserts that Wis. Stat. § 846.102 (2011-12)^[2], the statute governing foreclosure of abandoned properties, does not require it to sell a property after it obtains a judgment of foreclosure and the redemption period has passed. It maintains that the statute is permissive, not mandatory, and that it cannot be required to sell a property. The Bank further contends that even if the statute does mandate that the Bank sell the abandoned property after the redemption period, it provides no deadline for doing so. Thus, the Bank concludes that it is free to execute on its judgment at any time within five years after rendition of the judgment, and the circuit court is without authority to order it to sell the property at a specific time.

¶3 Based on the statute’s plain language and context, we conclude that when the court determines that a property is abandoned, Wis. Stat. § 846.102 authorizes the circuit court to order a mortgagee to bring the property to sale after the redemption period. We further conclude, consistent with the purpose of the statute, that the circuit court shall order the property to be brought to sale within a reasonable time after the redemption period. The circuit court’s determination of what constitutes a reasonable time should be based on the totality of the circumstances in each case.

¶4 In this case, the circuit court did not reach the issue of whether the property had been abandoned. Accordingly, we affirm the court of appeals and remand the cause to the circuit court for such a determination and further proceedings.

I

¶5 In 2007, Countrywide Home Loans loaned $52,000 to Carson. As security for the debt, Carson mortgaged her home on Concordia Avenue in Milwaukee, Wisconsin. After Carson defaulted on her payments, Countrywide and Carson entered an agreement modifying the terms of the loan. Subsequently, Carson again defaulted on the loan payments.

¶6 The Bank, as trustee for Countrywide, filed a complaint against Carson, seeking a judgment of foreclosure and sale of the mortgaged premises. Attempts to serve Carson at the Concordia Avenue property were unsuccessful. In his affidavit, the process server observed that the house appeared to be vacant. On his first visit he reported that the garage had been boarded, that the snow was not shoveled, there were no footprints in it, and there was no furniture in the house. Notes from his successive visits state that the snow was still not shoveled and there were still no footprints around the house.

¶7 Thereafter, the Bank published notice of the foreclosure action in a local newspaper. Carson, who was physically and financially unable to care for the property, did not file an answer or otherwise dispute the foreclosure. In April 2011, BAC Home Loan Servicing, LP, apparently a loan servicer for Countrywide, filed a City of Milwaukee Registration of Abandoned Property in Foreclosure form for the property.^[3]

¶8 The circuit court entered a judgment in favor of the Bank. It determined that Carson owed the Bank $81,356.59. After acknowledging that the property was not owner occupied, the court directed that the property “shall be sold at public auction under the direction of the sheriff, at any time after three month(s) from the date of entry of judgment.” The judgment also enjoined both parties from committing waste on the premises and specified that in the event the property is abandoned by the defendants, the Bank “may take all necessary steps to secure and winterize the subject property.”

¶9 After the judgment was entered, the Bank did not take steps to secure the property. It was repeatedly burglarized and vandalized. At one point someone started a fire in the garage. Despite an order from the City of Milwaukee Department of Neighborhood Services to maintain the property, the Bank did not do so. Carson received notices of accumulated trash and debris, as well as notices of overgrown weeds, grass, and trees. The City imposed approximately $1,800 in municipal fines on her and she made payments of approximately $25 per month toward the fines.

¶10 By November 2012, more than 16 months after the judgment of foreclosure was entered, the Bank had not sold the property and had no plans to sell it. Carson filed a motion to amend the judgment to include a finding that the property was abandoned and an order that the sale of the premises be made upon expiration of five weeks from the date of entry of the amended judgment, pursuant to Wis. Stat. § 846.102.^[4]

¶11 In support of her motion, Carson referenced the affidavit from the process server indicating that the house appeared vacant. She produced her own affidavit stating that she had terminated her utility accounts, that the property had been vandalized, that the doors and windows on the house had been boarded, and that the garage had been damaged by fire. She also produced the form the loan servicer filed with the City of Milwaukee registering the premises as an abandoned property, violation notices from the City indicating that there was trash and debris on the property, a copy of the complaint record from the City, and a re-inspection fee letter from the City.

¶12 The circuit court denied Carson’s motion. It observed that Wis. Stat. § 846.102 did not specifically grant it authority to order the Bank to sell the property at a specific time. It explained “I can’t find anywhere in the statute [Wis. Stat. § 846.102] that I have the authority to grant the relief that [Carson is] requesting.” The court further noted that the statute contemplates that the redemption period be elected by the mortgagee, not the borrower, and questioned whether a mortgagee could be compelled to execute a judgment when someone else is seeking the order. Accordingly, it stated, “I’m specifically finding that I don’t have the authority . . . so the motion is denied on those grounds.”

¶13 Carson appealed, arguing that under Wis. Stat. § 846.102 the circuit court did have the authority to order sale of the property upon expiration of the redemption period. The court of appeals agreed with Carson. Bank of New York v. Carson, 2013 WI App 153, ¶9, 352 Wis. 2d 205, 841 N.W.2d 573. It determined that “the plain language of the statute directs the court to ensure that an abandoned property is sold without delay, and it logically follows that if a party to a foreclosure moves the court to order a sale, the court may use its contempt authority to do so.” Id., ¶13. Accordingly, it reversed the circuit court and remanded the case. Id., ¶16.

II

¶14 This case presents two issues. First, we are asked to determine whether Wis. Stat. § 846.102 authorizes a circuit court to order a mortgagee to bring a property to sale. Second, we are asked whether a court can require a mortgagee to bring a property to sale at a certain point in time. Both questions require us to determine the scope of authority granted to the circuit court by Wis. Stat. § 846.102. Statutory interpretation is a question of law that we review independently of the determinations rendered by the circuit court and the court of appeals. Bank Mut. v. S.J. Boyer Constr., Inc., 2010 WI 74, ¶21, 326 Wis. 2d 521, 785 N.W.2d 462.

¶15 Our goal in statutory interpretation is to determine what the statute means so that it may be given its full, proper, and intended effect. State ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI 58, ¶44, 271 Wis. 2d 633, 681 N.W.2d 110. Interpretation of a statute begins with an examination of the statutory language. Id., ¶45. “Statutory language is given its common, ordinary, and accepted meaning, except that technical or specially-defined words or phrases are given their technical or special definitional meaning.” Id.

¶16 In seeking to give a statute its intended effect, we are cognizant that “[a] statute’s purpose or scope may be readily apparent from its plain language or its relationship to surrounding or closely-related statutes—that is, from its context or the structure of the statute as a coherent whole.” Id., ¶49. Thus, statutory language is interpreted “in the context in which it is used; not in isolation but as part of a whole; in relation to the language of surrounding or closely-related statutes.” Id., ¶46.

¶17 Where the statutory language is ambiguous we turn to extrinsic sources, such as legislative history, to help us discern the meaning of a statute. Id., ¶51. “[A] statute is ambiguous if it is capable of being understood by reasonably well-informed persons in two or more senses.” Id., ¶47 (citations omitted).

III

¶18 We begin with the language of the statute at issue. Wisconsin Stat. § 846.102 governs actions for enforcement of mortgage liens on abandoned properties.^[5] Under the statute, if the court makes an affirmative finding that a property has been abandoned, it shall enter a judgment stating that “the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.” Wis. Stat. § 846.102(1). It states:

(1) In an action for enforcement of a mortgage lien if the court makes an affirmative finding upon proper evidence being submitted that the mortgaged premises have been abandoned by the mortgagor and assigns, judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered. Notice of the time and place of sale shall be given under ss. 815.31 and 846.16 and placement of the notice may commence when judgment is entered.

Wis. Stat. § 846.102(1) (emphasis added).

¶19 The statute further permits entities other than the mortgagee to present evidence that a property had been abandoned and describes what type of evidence should be considered:

(2) In addition to the parties to the action to enforce a mortgage lien, a representative of the city, town, village, or county where the mortgaged premises are located may provide testimony or evidence to the court under sub. (1) relating to whether the premises have been abandoned by the mortgagor. In determining whether the mortgaged premises have been abandoned, the court shall consider the totality of the circumstances, including the following:

(a) Boarded, closed, or damaged windows or doors to the premises.

(b) Missing, unhinged, or continuously unlocked doors to the premises.

(c) Terminated utility accounts for the premises.

(d) Accumulation of trash or debris on the premises.

(e) At least 2 reports to law enforcement officials of trespassing, vandalism, or other illegal acts being committed on the premises.

(f) Conditions that make the premises unsafe or unsanitary or that make the premises in imminent danger of becoming unsafe or unsanitary.

Wis. Stat. § 846.102(2).

¶20 The plain language of the statute grants the circuit court the authority to order a bank to sell the property. Indeed, under the statute the court’s judgment must include a requirement that the property be sold. It provides that if the court makes a finding of abandonment then “judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.”^[6] Wis. Stat. § 846.102(1) (emphasis added).

¶21 Generally, “the word `shall’ is presumed mandatory when it appears in a statute.” Karow v. Milwaukee Cnty. Civil Serv. Comm’n, 82 Wis. 2d 565, 570, 263 N.W.2d 214 (1978); see also Norman J. Singer & J.D. Shambie Singer, 3 Sutherland Statutory Construction § 57:2 (7th ed. 2008) (“`Shall’ is considered presumptively mandatory unless there is something in the context or the character of the legislation which requires it to be looked at differently.”). We have previously interpreted “shall” as mandatory when used in Wis. Stat. ch. 846. GMAC Mortgage Corp. v. Gisvold, 215 Wis. 2d 459, 478, 572 N.W.2d 466 (1998).

¶22 We acknowledge, however, that although the word “shall” suggests that a statutory provision is mandatory, the legislature’s use of the word “shall” is not governed by a per se rule. See State v. R.R.E., 162 Wis. 2d 698, 707, 470 N.W.2d 283 (1991). This court has previously explained that “`[s]hall’ will be construed as directory if necessary to carry out the intent of the legislature.” Id.; see also State ex rel. Marberry v. Macht, 2003 WI 79, ¶15, 262 Wis. 2d 720, 665 N.W.2d 155 (court considers legislative intent in determining whether a statutory provision is mandatory or directory); State v. Thomas, 2000 WI App 162, ¶9, 238 Wis. 2d 216, 617 N.W.2d 230 (noting that factors to consider in determining whether a statute is mandatory include “the statute’s nature, the legislative objective for the statute, and the potential consequences to the parties, such as injuries or wrongs.”).

¶23 The context in which “shall” is used in Wis. Stat. § 846.102(1) indicates that the legislature intended it to be mandatory. First, when the legislature uses the terms “shall” and “may” in the same statutory section, it supports a mandatory reading of the term “shall” as the legislature is presumed to be aware of the distinct meanings of the words. GMAC Mortgage Corp., 215 Wis. 2d at 478; Karow, 82 Wis. 2d at 571; Singer 7 Singer, Sutherland Statutory Construction § 57:3. In Wis. Stat. § 846.102(1) the legislature used both “shall” and “may” indicating its intent that the words have different meanings.

¶24 Second, a comparison with the neighboring statutes also suggests that the term “shall” in Wis. Stat. § 846.102 was intended to be mandatory. The statutes on both sides of Wis. Stat. § 846.102 address mortgage foreclosures in other circumstances. Wisconsin Stat. § 846.101 addresses foreclosures on 20-acre properties.^[7] Wisconsin Stat. § 846.103 addresses foreclosures on commercial properties and multifamily residences.^[8] Under both statutes it is up to the mortgagee to elect whether to seek a foreclosure judgment. See Wis. Stat. § 846.101 (court enters judgment if mortgagee waives judgment of deficiency and permits the mortgagor to remain in possession of the property until it is sold); Wis. Stat. § 846.103 (same). In contrast to these neighboring statutes, Wis. Stat. § 846.102 does not require action by the mortgagee after it has initiated a foreclosure proceeding. It specifically permits entities other than the mortgagee to appear and submit evidence of abandonment. Wis. Stat. § 846.102(2). As the court of appeals stated, once a mortgagee has filed a foreclosure action, the focus of the proceeding is on the condition of the property, not the mortgagee’s preference. Bank of New York, 352 Wis. 2d 205, ¶12.

¶25 The Bank contends that the court of appeals’ interpretation of Wis. Stat. § 846.103 in Arch Bay Holdings LLC-Series 2008B v. Matson, No. 2013AP744, unpublished slip op. (Wis. Ct. App. Mar. 18, 2014), and Deutsche Bank Nat. Trust Co. v. Matson, No. 2012AP1981, unpublished slip op. (Wis. Ct. App. July 30, 2013), is dispositive on the issue of whether the court can require a mortgagee to sell an abandoned property. In Deutsche Bank, the court of appeals determined that the language in Wis. Stat. § 846.103 permitted the mortgagee to sell the property once the statutory prerequisites were met, but did not require it. No. 2012AP1981, ¶20. In Arch Bay, the court reached the same conclusion when interpreting a judgment containing the same language as the statute. No. 2013AP744, ¶17.

¶26 The Bank maintains that because the court of appeals determined that the language of Wis. Stat. § 846.103 was not mandatory, the same construction should be applied to Wis. Stat. § 846.102. However, as discussed above, Wis. Stat. § 846.103 and Wis. Stat. § 846.102 are significantly different statutes.^[9] See supra ¶20. Further, Arch Bay and Deutsche Bank are unpublished and have no precedential authority. Wis. Stat. § 809.23(3)(b). Although they may be cited as persuasive authority, given the above discussion, they do not persuade us that the language in Wis. Stat. § 846.102 is permissive.

¶27 Considering the statute’s clear language and its context, the Bank’s argument that it cannot be required to sell a property under Wis. Stat. § 846.102 is unpersuasive. Wisconsin Stat. § 846.102 mandates that the court order a sale of the mortgaged premises if certain conditions are met. Those conditions do not depend on action by the mortgagee alone and are not dependent on its acquiescence or consent.

IV

¶28 Having determined that Wis. Stat. § 846.102 authorizes a court to order a mortgagee to bring a property to sale, we turn to consider whether a court can also require a mortgagee to bring a property to sale at a certain point in time.

¶29 Again, we begin with the words of the statute. It provides that “the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment [of foreclosure] is entered.” Wis. Stat. § 846.102(1). This language is indicative of the time frame a court must impose for the sale: “upon expiration of 5 weeks.”

¶30 The Bank asserts that even if Wis. Stat. § 846.102 mandates that the circuit court order a sale of the property after the redemption period, it provides no time limit for the sale. Absent any specific timeline, the Bank contends that it has five years to execute its judgment under Wis. Stat. § 815.04.^[10]

¶31 We decline to adopt the Bank’s argument. We acknowledge that the word “upon” in Wis. Stat. § 846.102 is ambiguous as “upon expiration of 5 weeks from the date when such judgment is entered” could be read to mean any time after the five weeks but before the five years. It could also be interpreted to mean immediately upon expiration of five weeks or something in between. In discerning the answer to our inquiry, we examine here the context of the statute, its legislative history, and the purpose of the statute.

¶32 When considered in light of its neighboring statutes, the context of Wis. Stat. § 846.102 suggests that the legislature intended a prompt sale. Wisconsin Stat. § 846.101, addressing 20-acre properties, provides that if the mortgagee waives judgment of deficiency and permits the mortgagor to remain in the property until it is sold, the court shall enter a judgment that the property be sold after the expiration of six months from the date of the judgment. Wisconsin Stat. § 846.103, addressing foreclosures of commercial properties and multifamily residences, provides that the mortgagee waives judgment of deficiency and permits the mortgagor to remain in the property until it is sold, the court shall enter a judgment that the property be sold after the expiration of three months from the date of the judgment. Wis. Stat. § 846.103(2).

¶33 The statute at issue in this case, Wis. Stat. § 846.102, prompts faster sales with fewer requirements for abandoned premises than its neighboring statutes. It provides that upon finding abandonment, the court shall enter a judgment that the premises shall be sold after the expiration of five weeks. Wis. Stat. § 846.102(1). Unlike its neighboring statutes, Wis. Stat. § 846.102 does not contain the requirements that the mortgagee waive deficiency judgment and permit the mortgagor to remain on the premises in order for the court to order a sale. When viewed in light of its neighboring statutes, the loosened requirements in Wis. Stat. § 846.102 evince an intent to ensure a prompt sale of the property.

¶34 The contrary statutory intent asserted by the Bank is unconvincing. Referencing the redemption periods in Wis. Stat. §§ 846.101, 846.102 and 846.103, the Bank contends that the purpose behind the statute is to create delay so that defaulted borrowers will have one last chance to retain their properties. However, the Bank’s assertion ignores the differences between Wis. Stat. § 846.102 and those neighboring statutes. Wisconsin Stat. § 846.102 addresses properties that have been abandoned, properties which borrowers no longer have an interest in retaining. Thus, the policy concern of creating a delay does not appear to be implicated.

¶35 The legislative intent for a prompt sale is also supported by the legislative history of Wis. Stat. § 846.102. In 2011, Wis. Stat. § 846.102 was amended to shorten the redemption period for abandoned properties from two months to five weeks, to add subsection (2) permitting the city, town, village, or county to provide testimony or evidence of abandonment, and to indicate what sort of evidence of abandonment a court should consider. 2011 WI Act 136, §§ 1r, 2 (enacted Mar. 21, 2012). The Act was introduced as 2011 Senate Bill 307 with bipartisan support. Four individuals spoke at the public hearing on the bill: its sponsor, a representative of the City of Milwaukee, a representative of Legal Action of Wisconsin, and a representative of the Wisconsin Bankers Association. 2011 Senate Bill 307, Hearing before the Senate Committee on Financial Institutions and Rural Issues, 2011 Regular Session, Nov. 30, 2011. Each individual referenced that the bill’s intent was to help municipalities deal with abandoned properties in a timely manner.^[11]

¶36 Two of the speakers explained that abandoned properties were a significant problem in Milwaukee. Such properties increase the crime rate and have a destabilizing impact on neighborhoods. This testimony echoes researchers’ findings that home abandonment leads to blight:

Abandoned homes substantially decrease the value of neighboring properties, which in turn lowers the tax revenue cities can collect to help alleviate the blight caused by abandonment. Moreover, abandoned homes become public nuisances, such as fire hazards, that can endanger the community.

Creola Johnson, Fight Blight: Cities Sue to Hold Lenders Responsible for the Rise in Foreclosures and Abandoned Properties, 2008 Utah L. Rev. 1169, 1171.^[12]

¶37 Interpreting Wis. Stat. § 846.102 as permitting sale at any time within five years after judgment is entered would exacerbate the problem that the statute was meant to ameliorate. Such an interpretation would allow mortgagees to initiate foreclosures, but fail to bring the properties to sale for an extended period of time, leaving the properties in legal limbo.^[13]

¶38 Multiple studies have remarked upon the negative impact of such a scenario. For example, a study by the Government Accountability Office determined that abandoned foreclosures create unsightly and dangerous properties that contribute to neighborhood decline. GAO, Mortgage Foreclosures: Additional Mortgage Servicer Actions Could Help Reduce the Frequency and Impact of Abandoned Foreclosures, GAO-11-93 at 29 (Nov. 2010). “[A]s a result of vandalism, exposure, and neglect, vacant properties can become worthless. . . . abandoned foreclosures that remain vacant for extended periods pose significant health, safety, and welfare issues at the local level.” Id. at 31.

¶39 Another study has observed that “[t]he result of these abandoned foreclosures has been devastating to cities and consumers throughout the country.” Judith Fox, The Foreclosure Echo: How Abandoned Foreclosures are Reentering the Market through Debt Buyers, 26 Loy. Consumer L. Rev. 25, 29-30 (2013). “With no threat of citation for nuisance violations, and thus little incentive to maintain the premises, many lenders very well may allow the properties they control to deteriorate.” Kristin M. Pinkston, In the Weeds: Homeowners Falling Behind on their Mortgages, Lenders Playing the Foreclosure Game, and Cities Left Paying the Price, 34 S. Ill. U.L.J. 621, 633 (2009). Failing to interpret Wis. Stat. § 846.102 as enabling a court to require a prompt sale would inhibit its use as a tool to address abandoned properties.

¶40 Because its context and the legislative history of Wis. Stat. § 846.102 clearly indicate that the statute was intended to help municipalities deal with abandoned properties in a timely manner, we decline to interpret it so as to permit properties to languish abandoned for five years. Cf. Waller v. Am. Transmission Co., 2013 WI 77, ¶108, 350 Wis. 2d 242, 833 N.W.2d 764 (construing statute in a manner to further the statutory purpose); Bank Mut., 326 Wis. 2d 521, ¶¶71-76 (interpreting Wis. Stat. § 846.103 in a manner consistent with the statute’s goals).

¶41 In order to give effect to the statute’s purpose, we interpret the requirement in Wis. Stat. § 846.102 that a court order an abandoned property to be brought to sale after the five week redemption period as a requirement that the court order the property to be brought to sale within a reasonable time after the redemption period. Admittedly, what is considered a reasonable time will vary with the circumstances of each case. The circuit court is in the best position to consider arguments and evidence on this issue. Thus, we leave it to the circuit court’s discretion to determine, after considering the totality of the circumstances, what a reasonable period of time may be for each case, in light of the statute’s purpose.

V

¶42 In this case, the circuit court did not determine whether the property on Concordia Avenue was abandoned. Rather, it denied Carson’s motion after concluding that it did not have the authority to order the mortgagee to bring the property to sale as requested by Carson. Given that we have concluded that the circuit court does have such authority, a finding as to whether the property has been abandoned is needed here. Absent a finding of abandonment, sale of the property cannot be ordered under Wis. Stat. § 846.102.

¶43 Accordingly, we remand the case to the circuit court to determine whether the Concordia property has been abandoned. If the court finds that the property has been abandoned, it shall consider the totality of the circumstances and, consistent with the statutory purpose, enter an order stating the reasonable time after the redemption period in which the mortgagee must bring the property to sale.

VI

¶44 In sum, based on the statute’s plain language and context we conclude that when the court determines that the property is abandoned, Wis. Stat. § 846.102 authorizes the circuit court to order a mortgagee to bring a mortgaged property to sale after the redemption period.

¶45 We further conclude, consistent with the purpose of the statute, that the circuit court shall order the property to be brought to sale within a reasonable time after the redemption period. The circuit court’s determination of what constitutes a reasonable time should be based on the totality of the circumstances in each case.

¶46 In this case, the circuit court did not reach the issue of whether the property had been abandoned. Accordingly, we affirm the court of appeals and remand the case to the circuit court for such a determination and further proceedings.

By the Court.—The decision of the court of appeals is affirmed and the cause is remanded to the circuit court.

¶47 DAVID T. PROSSER, J. (concurring).

I agree with the majority’s decision to affirm the court of appeals. I do not agree with the majority’s reasoning in support of this decision. In my view, the owner of real property may seek a judicial sale of the property when the owner’s authority to sell is impeded or otherwise in doubt. Wis. Stat. § 840.03(1)(g). However, the ultimate availability of this judicial “remedy” is dependent upon the equities involved, including recognition of the “interests in real property” of others. Wis. Stat. § 840.01. For the reasons stated below, I respectfully concur.

I

¶48 The majority opinion is preoccupied with an interpretation of Wis. Stat. § 846.102, which is part of the chapter on Real Estate Foreclosure. Chapter 846 is a detailed and vitally important chapter of the Wisconsin Statutes. Section 846.102, entitled “Abandoned premises,” is a significant provision within the chapter. A mistaken interpretation of this section is likely to have profound ramifications on real estate financing in Wisconsin.

¶49 The early sections of Chapter 846 set out foreclosure procedure in a variety of situations. Before examining these sections, I believe it is useful to reiterate several fundamental principles.

¶50 A mortgage has been defined as “any agreement or arrangement in which property is used as security.” Wis. Stat. § 851.15. “Wisconsin is a lien-theory state with regard to mortgages. A mortgage creates a lien on real property but does not convey title to the property to the mortgagee (lender).” Lawrence Sager, Wisconsin Real Estate Practice & Law 137 (11th ed. 2004).

¶51 In simple terms, a “mortgage conveys an interest in the real estate to the lender as security for the debt, while the mortgage note is a promise to repay the debt. Mortgages are the most common form of loan instruments in Wisconsin.” Id.

¶52 The foreclosure provisions of Chapter 846 are invoked by mortgagees (lenders) when a mortgagor (borrower) fails to repay a debt. The law provides protections for the mortgagor, so that a mortgagee cannot move too quickly against the mortgagor, and the mortgagor has a period to redeem the property after foreclosure.

¶53 As a practical matter, a mortgagee invokes the foreclosure provisions of Chapter 846 when its loan is not being repaid. However, foreclosure does not transfer ownership of the property to the mortgagee. Thus, the mortgagee does not control the mortgaged property after foreclosure, and it may end up receiving no payment on its loan until the property is sold and the sale is confirmed. As a result, the mortgagee normally has a strong incentive for a prompt sale after foreclosure.

¶54 The mortgagee is usually entitled to a deficiency judgment against the mortgagor in the event that sale of the property does not satisfy the debt. In truth, however, many mortgagors do not have the wherewithal to satisfy a deficiency judgment. This is one reason why the mortgagee may waive its right to a deficiency judgment in order to speed up sale of the property. There is no reason for the mortgagee to delay sale of the property unless there is a rational economic reason to do so.

¶55 Wisconsin Stat. § 846.10 is the basic foreclosure statute. It reads in part:

(1) If the plaintiff recovers the judgment shall describe the mortgaged premises and fix the amount of the mortgage debt then due and also the amount of each installment thereafter to become due, and the time when it will become due, and whether the mortgaged premises can be sold in parcels and whether any part thereof is a homestead, and shall adjudge that the mortgaged premises be sold for the payment of the amount then due and of all installments which shall become due before the sale, or so much thereof as may be sold separately without material injury to the parties interested, and be sufficient to pay such principal, interest and costs; and when demanded in the complaint, direct that judgment shall be rendered for any deficiency against the parties personally liable and, if the sale is to be by referee, the referee must be named therein.

Wis. Stat. § 846.10(1).

¶56 Subsection (2) then reads:

(2) . . . No sale involving a one- to 4-family residence that is owner-occupied at the commencement of the foreclosure action . . . may be held until the expiration of 12 months from the date when judgment is entered, except a sale under s. 846.101 or 846.102. . . . In all cases the parties may, by stipulation, filed with the clerk, consent to an earlier sale.

Wis. Stat. § 846.10(2).

¶57 Section 846.101 deals with foreclosure sales (primarily of residential property under 20 acres) in which the mortgagor has agreed to a shorter period of time for sale and redemption (six months) and the “plaintiff” (mortgagee) has elected in its complaint to waive its right to a deficiency judgment against the mortgagor.

¶58 Section 846.102 permits an even shorter period between foreclosure and sale (five weeks) when the court finds that the mortgagor has abandoned the property—that is, “relinquishment of possession or control of the premises whether or not the mortgagor or the mortgagor’s assigns have relinquished equity and title.” Wis. Stat. § 846.102(1).

¶59 Section 846.103 relates to “Foreclosures of commercial properties and multifamily residences.”

¶60 The mortgagee is the “plaintiff” under these four sections. The mortgagor does not need to sue the mortgagee because the mortgagor may stipulate to a sale without initiating litigation. Wis. Stat. § 846.10(2).

¶61 That the mortgagee is the “plaintiff” under Wis. Stat. § 846.102 is clear from the opening phrase of the section: “In an action for enforcement of a mortgage lien. . . .” The mortgagee has the “mortgage lien” on mortgaged property as well as standing to enforce the lien; the mortgagor does not have either. Moreover, although § 846.102 does not use the word “plaintiff,” as surrounding §§ 846.10, 846.101, and 846.103 do, § 846.102 refers back to § 846.10: “judgment shall be entered as provided in s. 846.10. . . .”

¶62 Any notion that a municipality could bring an action under § 846.102 is belied by the language in subsection (2), which limits the role of “a representative” of a municipality to providing testimony or evidence of abandonment.^[1]

II

¶63 In this case, the Bank of New York brought suit against Shirley Carson under Wis. Stat. § 846.101. The Bank waived its right to a deficiency judgment. The complaint, filed January 25, 2011, reads in part:

6. The mortgagors expressly agreed to the reduced redemption period provisions contained in Chapter 846 of the Wisconsin Statutes; the plaintiff hereby elects to proceed under section 846.101 with a six month period of redemption, thereby waiving judgment for any deficiency against every party who is personally liable for the debt, and to consent that the owner, unless he or she abandons the property, may remain in possession and be entitled to all rents and profits therefrom to the date of confirmation of the sale by the court.

¶64 The Milwaukee County Circuit Court, Mel Flanagan, Judge, entered a default judgment (Findings of Fact, Conclusions of Law and Judgment) on June 13, 2011. The court found that “the mortgaged premises . . . shall be sold at public auction under the direction of the sheriff, at any time after three month(s) from the date of entry of judgment.” (Emphasis added.) The court also found “THAT NO DEFICIENCY JUDGMENT MAY BE OBTAINED AGAINST ANY DEFENDANT.” The court determined that the mortgagor’s indebtedness totaled $81,356.59.

¶65 The mortgagor made no effort to redeem the property. In fact, she abandoned the property, according to an affidavit she filed with the court on November 6, 2012.

¶66 On the same date, the mortgagor filed a motion in the original foreclosure case. The mortgagor brought the motion under Wis. Stat. §§ 806.07(g) & (h) and 846.102. The motion sought to reopen the foreclosure judgment pursuant to Wis. Stat. § 806.07 and to compel the Bank to sell the mortgaged property “upon the expiration of 5 weeks from the date of entry of the amended judgment” under Wis. Stat. § 846.102.

¶67 As the majority opinion notes, the Milwaukee County Circuit Court, Jane Carroll, Judge, denied the motion. The court “observed that Wis. Stat. § 846.102 did not specifically grant it authority to order the Bank to sell the property at a specific time.” Majority op., ¶12.

It explained “I can’t find anywhere in the statute [Wis. Stat. § 846.102] that I have the authority to grant the relief that [Carson is] requesting.” The court further noted that the statute contemplates that the redemption period be elected by the mortgagee, not the borrower, and questioned whether a mortgagee could be compelled to execute a judgment when someone else is seeking the order. Accordingly, it stated, “I’m specifically finding that I don’t have the authority . . . so the motion is denied on those grounds.”

Id.

¶68 The court of appeals reversed. Bank of New York v. Carson, 2013 WI App 153, 352 Wis. 2d 205, 841 N.W.2d 573. The court of appeals criticized the Bank (mortgagee) for not maintaining the property. Id., ¶5. More important, the court of appeals concluded that a mortgagor could rely on Wis. Stat. § 846.102 to compel a sale of the mortgagor’s property:

We . . . conclude that the trial court erred as a matter of law when it concluded that only the Bank could elect the five-week abandonment period provided in the statute. The trial court could have . . . decided to amend the judgment to a foreclosure of an abandoned property as described by § 846.102.

Id., ¶12. The court of appeals added:

The statutory language also makes clear that the trial court did have the power to order the Bank to sell the property upon the expiration of the redemption period. . . . We conclude that the plain language of the statute directs the court to ensure that an abandoned property is sold without delay, and it logically follows that if a party to a foreclosure moves the court to order a sale, the court may use its contempt authority to do so.

Id., ¶13.

¶69 The majority affirms the court of appeals without disavowing these pronouncements. On the contrary, the majority adopts the method of statutory interpretation used by the court of appeals, see majority op., ¶¶18, 20, 21, 23, 24, to reach the following conclusions:

(1) “The plain language of [Wis. Stat. § 846.102] grants the circuit court the authority to order a bank to sell the property.” Id., ¶20. “[I]f the court makes a finding of abandonment then `judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.’ Wis. Stat. § 846.102(1) (emphasis added).” Id. (footnote omitted).

(2) “The context in which `shall’ is used in Wis. Stat. § 846.102(1) indicates that the legislature intended it to be mandatory.” Id., ¶23.

(3) “Wis. Stat. § 846.102 does not require action by the mortgagee after it has initiated a foreclosure proceeding. . . . As the court of appeals stated, . . . the focus of the proceeding is on the condition of the property, not the mortgagee’s preference.” Id., ¶24.

(4) “Considering the statute’s clear language and its context, the Bank’s argument that it cannot be required to sell a property under Wis. Stat. § 846.102 is unpersuasive. Wisconsin Stat. § 846.102 mandates that the court order a sale of the mortgaged premises if certain conditions are met. Those conditions do not depend on action by the mortgagee alone and are not dependent on its acquiescence or consent.” Id., ¶27.

(5) “[W]e turn to consider whether a court can also require a mortgagee to bring a property to sale at a certain point in time.” Id., ¶28. “[W]e begin with the words of the statute. . . . This language is indicative of the time frame a court must impose for the sale: `upon expiration of 5 weeks.'” Id., ¶29.

(6) “[T]he context of Wis. Stat. § 846.102 suggests that the legislature intended a prompt sale.” Id., ¶32. “The legislative intent for a prompt sale is . . . supported by the legislative history. . . .” Id., ¶35.

¶70 I acknowledge that the majority opinion softens its holdings by requiring a court acting under Wis. Stat. § 846.102 to order mortgaged property to be “brought to sale within a reasonable time after the redemption period.” Id., ¶41. But this statement is inconsistent with the majority’s overall interpretation of the statute.

III

¶71 The majority opinion radically revises the law on mortgage foreclosure. Under Wisconsin law, a lending institution like the Bank of New York does not own the property upon which it holds a mortgage as security for a debt. The mortgagee’s obvious goal is to be repaid on its loan, with interest for the use of its money. When this goal becomes infeasible, the mortgagee prudently seeks to minimize its loss. Sometimes the mortgagee delays the sale of foreclosed property in the expectation that the circumstances for sale will improve. The majority opinion substantially impairs the mortgagee’s ability to minimize or mitigate a loss.

¶72 The opinion shifts to the circuit court the authority to set the date for sale of abandoned property. It gives the court authority to disregard the preferences of the mortgagee as to the timing of the sale when the mortgagee files for foreclosure under Wis. Stat. §§ 846.10, 846.101, or 846.102.

¶73 Because of this loss in flexibility, mortgagees are likely to act to protect their interests. For instance, the costs of borrowing money to finance residential real estate transactions are likely to go up, and some potential borrowers will be denied loans altogether.

¶74 Under the new regime, thousands of foreclosed properties statewide may have to be scheduled for sale within a few months of this decision because they have already been held by mortgagees without sale for an “unreasonable” period after foreclosure.

¶75 These consequences are not discussed by a majority that is a bit too eager to depict mortgage lenders as the source of the problem.

¶76 Knowing what they face if they file for foreclosure when the timing is not propitious, many mortgagees may choose not to file foreclosure actions. If mortgagees forego filing, leverage will transfer from mortgagees to non-paying mortgagors.

¶77 Still, some mortgagors may wish to extricate themselves from their continuing ownership responsibilities.

¶78 The majority attempts to preclude a mortgagor from becoming a plaintiff under Wis. Stat. § 846.102, majority op.,

¶18 n.5, by suggesting that only a mortgagee may initiate an action under Chapter 846. This is a correct interpretation of the chapter. However, it does not account for Wis. Stat. § 840.03.

¶79 Wisconsin Stat. § 840.01(1) defines the term “interest in real property.”^[2] The definition implicates those who own or hold title to land (like Shirley Carson) and those with “security interests and liens on land” (like the Bank of New York).

¶80 Wisconsin Stat. § 840.03 then provides: Real property remedies. (1) Any person having an interest in real property may bring an action relating to that interest, in which the person may demand the following remedies singly, or in any combination, or in combination with other remedies not listed, unless the use of a remedy is denied in a specified situation:

(a) Declaration of interest.

(b) Extinguishment or foreclosure of interest of another.

(c) Partition of interest.

(d) Enforcement of interest.

(e) Judicial rescission of contract.

(f) Specific performance of contract or covenant.

(g) Judicial sale of property and allocation of proceeds.

(h) Restitution.

(i) Judicial conveyance of interest.

(j) Possession.

(k) Immediate physical possession.

(l) Restraint of another’s use of, or activities on, or encroachment upon land in which plaintiff has an interest.

(m) Restraint of another’s use of, activities on, or disposition of land in which plaintiff has no interest; but the use, activity or disposition affect plaintiff’s interest.

(n) Restraint of interference with rights in, on or to land.

(o) Damages.

(2) The indication of the form and kind of judgment in a chapter dealing with a particular remedy shall not limit the availability of any other remedies appropriate to a particular situation.

(Emphasis added.)

¶81 Section 840.03 includes in its listed remedies “Judicial sale of property” and “Judicial conveyance of interest.” Mortgagors may seek to secure one of these remedies to escape the responsibilities of ownership.

¶82 As I read the statute, the owner of property may “bring an action” for a judicial sale or a judicial conveyance of interest. Although a mortgagor may not be able to serve as plaintiff in a foreclosure action under any of the foreclosure statutes, e.g., Wis. Stat. §§ 846.10, 846.101, 846.102, and 846.103, the mortgagor may be able to invoke the new principles this court has discovered in Wis. Stat. § 846.102 when it “brings an action” for judicial sale or conveyance of interest under Wis. Stat. § 840.03(1).

¶83 Wisconsin Stat. § 840.03(1) has been part of Wisconsin law for 40 years. See § 16, Chapter 189, Laws of 1973 (creating Wis. Stat. § 840.03(1) (1974)). It has been interpreted as creating substantive rights. SJ Props. Suites v. Specialty Fin. Grp., LLC, 864 F. Supp. 2d 776 (E.D. Wis. 2012). Nonetheless, a mortgagor seeking the sale of his or her property or the conveyance of his or her property under Wis. Stat. § 840.03(1) would heretofore have been required to show that the mortgagor was entitled equitably to this remedy, inasmuch as it is clear that a defaulting mortgagor does not have the same powers and prerogatives as a mortgagee under Wis. Stat. § 846.102.

¶84 “An action to foreclose a mortgage is equitable in nature.” Wis. Brick & Block Corp. v. Vogel, 54 Wis. 2d 321, 327, 195 N.W.2d 664 (1972) (citing Frick v. Howard, 23 Wis. 2d 86, 96, 126 N.W.2d 619 (1964)); see also Harbor Credit Union v. Samp, 2011 WI App 40, ¶19, 332 Wis. 2d 214, 796 N.W.2d 813; JP Morgan Chase Bank, NA v. Green, 2008 WI App 78, ¶11, 311 Wis. 2d 715, 753 N.W.2d 536; First Fin. Sav. Ass’n v. Spranger, 156 Wis. 2d 440, 444, 456 N.W.2d 897 (Ct. App. 1990). This equity prevails throughout the proceedings. GMAC Mortg. Corp. v. Gisvold, 215 Wis. 2d 459, 480, 572 N.W.2d 466 (1998). The court’s discretion should be exercised so that “no injustice shall be done to any of the parties.” Strong v. Catton, 1 Wis. 408, 424 (1853).

¶85 Considering equity, a mortgagee may want to delay the sale of mortgaged property that has been abandoned for legitimate economic reasons. Admittedly, the mortgagee might be forced to recognize that such a delay will constitute a burden on the mortgagor in terms of maintenance and taxes. Consequently, it is not inherently unreasonable for a mortgagor to seek relief from such a burden, inasmuch as it is unrealistic to expect that a mortgagor will properly maintain and pay the taxes on property it has abandoned. At the same time, however, if the mortgagee is expected to assume responsibility for abandoned property, the mortgagee must be given reasonable options, even if unpalatable, rather than be forced into an unwanted sale without the protection of the equitable principles upon which mortgage foreclosures rest.

¶86 The majority opinion alters these principles by its interpretation of Wis. Stat. § 846.102. It forces prompt public sales despite the objection of the mortgagee. This interpretation of Wis. Stat. § 846.102 does not comport with the statute’s language or its legislative history and will often be inequitable to the mortgagee. Even a mortgagee that conscientiously maintains abandoned property may be forced to sell it quickly at the direction of the court.

¶87 I agree that the mortgagor here is entitled to seek the statutorily recognized remedy of “sale,” but only as provided under Wis. Stat. § 840.03(1)(g), prior to the court’s mistaken interpretation of Wis. Stat. § 846.102. For the reasons set forth, I respectfully concur.

¶88 I am authorized to state that Justice ANNETTE KINGSLAND ZIEGLER and Justice MICHAEL J. GABLEMAN join this concurrence.

[1] Bank of New York v. Carson, 2013 WI App 153, 352 Wis. 2d 205, 841 N.W.2d 573 (reversing judgment of the circuit court for Milwaukee County, Jane V. Carroll, judge).

[2] All subsequent references to the Wisconsin Statutes are to the 2011-12 version unless otherwise indicated.

[3] “Loan servicers are the entities that collect payments for mortgages, provide billing and tax payments to the homeowners, and have sole control over the modification of a loan.” Andrew Peace, Coming Up for Air: The Constitutionality of Using Eminent Domain to Condemn Underwater Mortgages, 54 B.C. L. Rev. 2167, 2178 n.82 (2013).

[4] Wisconsin Stat. § 846.102(1) states:

In an action for enforcement of a mortgage lien if the court makes an affirmative finding upon proper evidence being submitted that the mortgaged premises have been abandoned by the mortgagor and assigns, judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.

[5] The language of the statute and its placement within chapter 846 indicate that it governs only foreclosure actions initiated by mortgagees.

[6] Wisconsin Stat. § 846.10 states, in relevant part:

(1) If the plaintiff recovers the judgment shall describe the mortgaged premises and fix the amount of the mortgage debt then due and also the amount of each installment thereafter to become due, and the time when it will become due, . . . and shall adjudge that the mortgaged premises be sold for the payment of the amount then due . . . and when demanded in the complaint, direct that judgment shall be rendered for any deficiency against the parties personally liable. . . . (2)

[7] Wisconsin Stat. § 846.101 states:

(1) If the mortgagor has agreed . . . to the provisions of this section, and the foreclosure action involves a one- to 4-family residence that is owner-occupied at the commencement of the action . . . the plaintiff in a foreclosure action of a mortgage on real estate of 20 acres or less . . . may elect . . . to waive judgment for any deficiency which may remain due to the plaintiff after sale of the mortgaged premises . . . and to consent that the mortgagor, unless he or she abandons the property, may remain in possession of the mortgaged property and be entitled to all rents, issues and profits therefrom to the date of confirmation of the sale by the court.

(2) When plaintiff so elects, judgment shall be entered as provided in this chapter, except that . . . the sale of such mortgaged premises shall be made upon the expiration of 6 months from the date when such judgment is entered.

[8] Wisconsin Stat. § 846.103 provides:

(1) No foreclosure sale involving real property other than a one- to 4-family residence that is owner-occupied at the commencement of the foreclosure action. . . may be held until the expiration of 6 months from the date when judgment is entered except a sale under sub. (2). . . .

(2) If the mortgagor of real property other than a one- to 4-family residence that is owner-occupied at the commencement of the foreclosure action . . . has agreed . . . to the provisions of this section, the plaintiff in a foreclosure action of a mortgage. . . may elect by express allegation in the complaint to waive judgment for any deficiency which may remain due to the plaintiff after sale of the mortgaged premises . . . and to consent that the mortgagor, unless he or she abandons the property, may remain in possession of the mortgaged property and be entitled to all rents, issues and profits therefrom to the date of confirmation of the sale by the court. When the plaintiff so elects, judgment shall be entered as provided in this chapter, except that . . . the sale of the mortgaged premises shall be made upon the expiration of 3 months from the date when such judgment is entered.

[9] We decline to interpret the similar sale language in Wis. Stat. §§ 846.101 and 846.103 as it is not at issue in this case.

[10] Wisconsin Stat. § 815.04(1)(a) provides:

Upon any judgment of a court of record perfected as specified in s. 806.06 or any judgment of any other court entered in the judgment and lien docket of a court of record, execution may issue at any time within 5 years after the rendition of the judgment. When an execution has been issued and returned unsatisfied in whole or in part other executions may issue at any time upon application of the judgment creditor.

[11] The hearing can be viewed online at: http://www.wiseye.org/Programming/VideoArchive/ArchiveList.aspx? cm=152.

[12] The City of Milwaukee submitted an amicus brief detailing the scope of the City’s abandoned property problem. It noted that there are currently 4,900 vacant buildings in the City. According to the City’s records, approximately 400 of those 4,900 properties are currently in some stage of mortgage foreclosure.

Abandoned properties in Milwaukee are a magnet for crime and create unsafe conditions. The City explained that since 2011, its police department has responded to at least 2,025 burglaries, 93 aggravated assaults, 84 robberies, 44 sexual assaults, 36 sudden deaths, and 7 homicides at vacant buildings. Further, the City’s fire department reported a 163% increase in the number of fires occurring in vacant residential buildings between 2005 and 2012.

[13] Various terms are used to describe this situation, including: “abandoned foreclosure,” “bank walkaway,” “zombie title/property,” and “limbo loan.” See Judith Fox, The Foreclosure Echo: How Abandoned Foreclosures are Reentering the Market Through Debt Buyers, 26 Loy. Consumer L. Rev. 25, 31 (2013).

[1] The principal author of the bill creating subsection (2) of Wis. Stat. § 846.102, Senator Glenn Grothman, explained that the purpose of the legislation was to shorten the redemption period in abandonment cases from two months to five weeks and to permit municipalities to present evidence of abandonment. He testified: “The effects of this bipartisan bill will be modest, but they are an attempt to better balance the needs of municipalities and responsible homeowners while still protecting the rights of property owners who may have fallen on hard times.” Legislative Council File for 2011 S.B. 307, Letter from Sen. Glenn Grothman to Members of the Assembly Committee on Financial Institutions (Feb. 1, 2012), available at http://legis.wisconsin.gov/lc/comtmats/old/11files/sb0307_201112 01084222.pdf.

[2] Wisconsin Stat. § 840.01(1) reads:

(1) Except as provided in sub. (2), “interest in real property” includes estates in, powers under ch. 702 over, present and future rights to, title to, and interests in real property, including, without limitation by enumeration, security interests and liens on land, easements, profits, rights of appointees under powers, rights under covenants running with the land, powers of termination and homestead rights. The interest may be an interest that was formerly designated legal or equitable. The interest may be surface, subsurface, suprasurface, riparian or littoral.

ADIEL GOREL AND FLCA TROPICAL HOLDINGS, LLC, Appellants,
v.
THE BANK OF NEW YORK MELLON, ETC., Appellee.

Elizabeth T. Frau and Jeffrey M. Gano, of Ronald R. Wolfe & Associates, PL, Tampa, for Appellee.

PER CURIAM.

Adiel Gorel and FLCA Tropical Holdings, LLC appeal the Final Summary Judgment of Mortgage Foreclosure in favor of The Bank of New York Mellon (Bank). Gorel and FLCA contend that Bank failed to establish that it was entitled to summary judgment because it failed to properly refute their affirmative defense alleging Bank’s failure to provide them with pre-acceleration notice as required by the terms of the mortgage. We agree, reverse the summary judgment under review, and remand this case for further proceedings. See Pavolini v. Williams, 915 So. 2d 251, 253 (Fla. 5th DCA 2005) (“`[T]he plaintiff must either disprove those defenses by evidence or establish their legal insufficiency. Thus, summary judgment is appropriate only where each affirmative defense has been conclusively refuted on the record.'” (citation omitted) (quoting The Race, Inc. v. Lake & River Recreational Props., Inc., 573 So. 2d 409, 410 (Fla. 1st DCA 1991))); see also Haven Fed. Sav. & Loan Ass’n v. Kirian, 579 So. 2d 730, 733 (Fla. 1991) (“A court cannot grant summary judgment where a defendant asserts legally sufficient affirmative defenses that have not been rebutted.”); Gray v. Union Planters Nat’l Bank, 654 So. 2d 1288, 1288 (Fla. 3d DCA 1995) (“`[W]here a defendant pleads an affirmative defense and the plaintiff does not by affidavit contradict or deny that defense, the plaintiff is not entitled to a summary judgment.'” (quoting Johnson & Kirby, Inc. v. Citizens Nat’l Bank of Ft. Lauderdale, 338 So. 2d 905, 906 (Fla. 3d DCA 1976))).

REVERSED and REMANDED.

SAWAYA, PALMER, and LAMBERT, JJ., concur.

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

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MONTGOMERY COUNTY, PENNSYLVANIA,
RECORDER OF DEEDS, by and through
NANCY J. BECKER, in her official capacity as
the Recorder of Deeds of Montgomery County,
Pennsylvania, on its own behalf and on behalf
of all others similarly situated,
Plaintiff,

vs.

THE BANK OF NEW YORK MELLON, THE
BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., CITIBANK, N.A., DEUTSCHE
BANK NATIONAL TRUST COMPANY,
DEUTSCHE BANK TRUST COMPANY
AMERICAS, HSBC BANK USA, N.A.,
JPMORGAN CHASE BANK, N.A., and WELLS
FARGO BANK, N.A.,
Defendants.

I. NATURE OF THE ACTION

1. The Montgomery County, Pennsylvania, Recorder of Deeds, by and through
Nancy J. Becker, the Montgomery County Recorder of Deeds, brings this action on its own
behalf and on behalf of a class of all other similarly situated Pennsylvania County Recorders of
Deeds (collectively, the “Recorders” or the “Class”) against The Bank of New York Mellon, The
Bank of New York Mellon Trust Company, N.A., Citibank N.A., Deutsche Bank National Trust
Company, Deutsche Bank Trust Company Americas, HSBC Bank, N.A., JPMorgan Chase N.A.,
and Wells Fargo Bank, N.A. (“Defendants”) to remedy Defendants’ failures to properly and
timely record mortgage assignments as required by Pennsylvania law.

2. Defendants have been among the most active participants in the mortgage-backed
securities (“MBS”) industry, including as trustees for numerous MBS trusts into which the
securitized mortgage loans are ultimately conveyed. In a securitization, a mortgage loan typically
is transferred multiple times before it is conveyed to the trustee on behalf of the MBS trust. Each
of the Defendants has engaged in transfers of mortgage loans secured by real property located in
Montgomery County and throughout Pennsylvania,

3. Each of the Defendants is also a member of, and participates in, the “MERS
System,” a private, members-only electronic registry for recording and tracking transfers of
mortgage loans without recording mortgage assignments in public land records offices.

4. In Montgomery County, Pa. v. MERSCORP, Inc., l1-CV-6968, 2014 WL
2957494 (E.D. Pa. Jun. 30,2014), this Court, per the Honorable 1. Curtis Joyner, entered a
declaratory judgment in Plaintiffs favor, finding that the failure to create and record mortgage
assignments evincing the transfers of promissory notes secured by mortgages on Pennsylvania
real estate, under the MERS System and otherwise, violates Pennsylvania recording statutes,
including 21 P.S. §§ 351,444 and 623-1.

5. Each of the Defendants has systematically failed to create and timely record mortgage
assignments in connection with transfers of promissory notes secured by mortgages on Pennsylvania
real estate, both when operating within the MERS System and otherwise. These failures to record
mortgage assignments have damaged the integrity of Pennsylvania’s public land records by
creating gaps in the chain of title and creating confusion amongst property owners and others
about the identity of the owners of their mortgages, and have wrongfully deprived the
Montgomery County Recorder of Deeds and all of the other Pennsylvania Recorders of millions
of dollars in recording fees, in violation of21 P.S. §§ 351,444 and 623-1 (together, the
“Pennsylvania Recording Statutes”). Plaintiff seeks an award of damages for these violations, to quiet
title on all of the adversely affected Pennsylvania properties by requiring Defendants to record the
missing mortgage assignments and pay the related recording fees, restitution for Defendants’ unjust
enrichment, and for declaratory and permanent injunctive relief

[…]

MORIN MAGLOIRE and GERMAIN JEAN CLAUDE, Appellants,
v.
THE BANK OF NEW YORK as Trustee for the certificate holders CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2006-23, Appellee.

Michael P. Bruning of Connolly, Geaney, Ablitt & Willard, P.C., West Palm Beach, for appellee.

PER CURIAM.

The homeowners appeal the trial court’s order granting final summary judgment of foreclosure in favor of the bank. The homeowners argue that the trial court erred in granting the bank’s motion for summary judgment after the trial court previously dismissed the case for lack of prosecution. We agree.

On October 10, 2008, the bank filed a mortgage foreclosure complaint based on a mortgage and note executed by the homeowners in September of 2006. On October 15, 2008, the homeowners filed an answer to the complaint, in the form of a letter to the court, explaining that they had “experienced a serious hardships [sic] that have prevented [them] from making the mortgage payments on [their] primary residence.” Additionally, they stated that they were trying to work with the leader “to work out a re-instatement or re-payment plan.”

On November 19, 2009, the trial court filed a notice of intent to dismiss the bank’s complaint after there had been no record activity in the case since November 5, 2008. The trial court set a hearing on the issue, and the bank filed a statement asserting good cause as to why the action should remain pending.^[1] Within its response, the bank stated that it was currently evaluating the homeowner’s loan to determine if the homeowners would qualify for a settlement offer, and asked the court to allow the case to remain open until the bank could complete negotiations with the homeowners. On December 16, 2009, the trial court entered a final order of dismissal of the bank’s complaint, because there was “no record activity > 1 yr (since 11/5/2008) and no good cause.”

On June 28, 2010, the bank filed a motion for summary judgment. Then, on November 9, 2011, a hearing was held on the bank’s motion for summary judgment. On the same date, the trial court entered a summary final judgment of foreclosure in favor of the bank. The homeowners appeal this order.

There were no transcripts provided of the motion for summary judgment hearing, and it is therefore unknown whether the homeowners raised the issue of the previous dismissal of the case and the trial court’s subsequent lack of jurisdiction over the case. However, “the issue of subject-matter jurisdiction . . . may be raised for the first time on appeal.” Rudel v. Rudel, 111 So. 3d 285, 291 (Fla. 4th DCA 2013).^[2]

“Whether a court has subject matter jurisdiction is a question of law reviewed de novo.” Sanchez v. Fernandez, 915 So. 2d 192, 192 (Fla. 4th DCA 2005).

A trial court lacks jurisdiction to hear a case once it has been dismissed. See Gardner v. Nioso, 108 So. 3d 1122, 1123 (Fla. 1st DCA 2013) (“[B]y the trial court’s dismissal of the action against them, and the subsequent affirmance of that dismissal, the trial court no longer has jurisdiction over Appellees.”); Harrison v. La Placida Cmty. Ass’n, 665 So. 2d 1138, 1141 (Fla. 4th DCA 1996) (“Once [the defendat] was dismissed, the trial court no longer had jurisdiction over her.’); Ludovici v. McKiness, 545 So. 2d 335, 336 n.3 (Fla. 3d DCA 1989) (“A trial court lacks jurisdiction to vacate an order of dismissal without prejudice after the order becomes final. An exception to this finality is a Rule 1.540 motion. The trial court has jurisdiction to entertain a timely motion for rehearing or to revisit the cause on the court’s own initiative within the time allowed for a rehearing motion.”) (internal citations omitted); Derma Lift Salon, Inc v. Swanko, 419 So. 2d 1180, 1180-81 (Fla. 3d DCA 1982). (“The trial court’s order of dismissal entered May 11, 1982, albeit `without prejudice,’ was a final appealable order, subject to the further jurisdiction of the trial court only upon a timely filed motion for rehearing under Florida Rule of Civil Procedure 1.530.”) (internal citation omitted). Since there was no motion for rehearing or motion to vacate filed or ruled upon regarding the order of dismissal in the instant case, the trial court did not have jurisdiction to enter an order granting the bank’s subsequently-filed motion for summary judgment. Additionally, although the trial court’s final order of dismissal was entered “without prejudice to refile,” the bank never refiled the complaint prior to filing its motion for summary judgment.

The bank argues that the trial court’s order should be allowed to stand because it exercised its powers of “equitable jurisdiction” in granting the bank’s motion for summary judgment. However, we find the bank’s argument, basically that equitable jurisdiction can replace subject-matter jurisdiction, unconvincing. See Black’s Law Dictionary 18(c) (9th ed. 2009) (quoting William Q. de Funiak, Handbook of Modern Equity 38 (2d ed. 1956)) (“[T]he term equity jurisdiction does not refer to jurisdiction in the sense of the power conferred by the sovereign on the court over specified subject-matters or to jurisdiction over the res or the persons of the parties in a particular proceeding but refers rather to the merits. The want of equity jurisdiction does not mean that the court has no power to act but that it should not act, as on the ground, for example, that there is an adequate remedy at law.”) (emphasis added) (internal quotation marks omitted).

Therefore, we reverse the trial court’s order granting the bank’s motion for summary judgment and remand the case to the trial court for proceedings consistent with this opinion.

Reversed and remanded.

GROSS, GERBER and CONNER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] “[T]he action shall be dismissed by the court on its own motion or on the motion of any interested person, whether a party to the action or not, after reasonable notice to the parties, unless a party shows good cause in writing at least 5 days before the hearing on the motion why the action should remain pending. Mere inaction for a period of less than 1 year shall not be sufficient cause for dismissal for failure to prosecute.” Fla. R. Civ. P. 1.420(e) (emphasis added).

[2] The type of jurisdiction at issue in the instant case is that of subject-matter jurisdiction. See Bernard v. Rose, 68 So. 3d 946, 948 (Fla. 3d DCA 2011) (referring to the trial court’s jurisdiction over a case after a dismissal for lack of prosecution as that of subject-matter jurisdiction).

Suzanne Lopes, Albuquerque, NM, Pro Se Appellant.

OPINION

VIGIL, Judge.

{1} Defendant, Suzanne Lopes (Homeowner), appeals from the district court order granting summary judgment in favor of Plaintiff, The Bank of New York Mellon (the Bank). Homeowner contends, among other things, that the Bank failed to show that it had standing to bring its foreclosure claim. We agree with Homeowner and reverse.

I. BACKGROUND

{2} Homeowner executed a promissory note to Countrywide Home Loans, Inc. (Countrywide), in the amount of $140,000 for the purchase of a home. Homeowner also signed a mortgage contract with Mortgage Electronic Registration Systems (MERS), as nominee for Countrywide, as security for the loan. On July 6, 2011, MERS assigned Homeowner’s mortgage to the Bank. On August 4, 2011, the Bank filed a complaint for foreclosure, asserting that the loan was in default. The complaint asserted that “[the Bank] is the owner of the [m]ortgage and the holder in due course of the [n]ote.” The Bank attached to the complaint copies of the mortgage and the mortgage assignment. Representing herself, Homeowner answered, asserting that to bring the action, the Bank was required to own both the mortgage and the promissory note. Because there was no evidence that the Bank owned the note, Homeowner contended that the Bank had no standing.

{3} On September 22, 2011, as an exhibit to the Bank’s response to a motion filed by Homeowner to disqualify counsel, the Bank attached a copy of a promissory note from Homeowner to Countrywide. The note was indorsed in blank by Michelle Sjolander, Executive Vice President of Countrywide. The indorsement was undated and appears to be signed by stamp rather than by hand. No evidence was presented to show when or how the Bank came into possession of the note. In any case, the Bank asserted that the assignment of the mortgage by MERS “effectively assign[ed] the [n]ote as well because . . . the [n]ote is secured by the [m]ortgage.” The Bank then filed a motion for summary judgment, which the district court granted, and it filed a decree of foreclosure on the home in favor of the Bank.

{4} Homeowner appeals, arguing that the Bank has no right to foreclose, which we construe to mean it has no standing to bring the action. In its amended answer brief, the Bank asserts that a copy of the mortgage and assignment of mortgage were attached to the original complaint and that substantial evidence supports the finding by the district court that it was a holder under the New Mexico Uniform Commercial Code (UCC) of Homeowner’s note.

II. DISCUSSION

{5} On appeal, Homeowner raises several issues in addition to standing. Because our disposition of the standing issue is dispositive, we do not reach the merits of the other issues.

A. Standard of Review

{6} “Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. We review issues of law de novo. Id. “The movant need only make a prima facie showing that he is entitled to summary judgment. Upon the movant making a prima facie showing, the burden shifts to the party opposing the motion to demonstrate the existence of specific evidentiary facts which would require trial on the merits.” Roth v. Thompson, 1992-NMSC-011, ¶ 17, 113 N.M. 331, 825 P.2d 1241. Because we hold that there are material issues of fact and matters of law that preclude summary judgment, we reverse the order granting summary judgment to the Bank.

B. The Bank Lacks Standing

{7} Our Supreme Court “clarified that standing is a jurisdictional prerequisite.” Deutsche Bank Nat’l Trust Co. v. Beneficial N.M. Inc., 2014-NMCA-___, ___ P.3d ___, ¶ 8 (No. 31,503, May 1, 2014); see also Bank of N.Y. v. Romero, 2014-NMSC-007, ¶ 15, 320 P.3d 1 (“[L]ack of standing is a potential jurisdictional defect.” (alteration, internal quotation marks, and citation omitted)). Therefore, standing must be established as of the commencement of a suit. Bank of N.Y., 2014-NMSC-007, ¶ 17 (“[S]tanding is to be determined as of the commencement of suit.” (alteration in original) (internal quotation marks and citation omitted)); Deutsche Bank, 2014-NMCA-___, ¶ 8 (“[S]tanding . . . must be established at the time the complaint is filed.”); Lujan v. Defenders of Wildlife, 504 U.S. 555, 570 n.5 (1992) (“[S]tanding is to be determined as of the commencement of suit[.]”).

{8} In order for the Bank to establish standing to bring a suit for foreclosure against Homeowner, it was required to demonstrate the right to enforce both the promissory note and the mortgage lien on the property at the time it filed its complaint. See Bank of N.Y., 2014-NMSC-007, ¶ 17 (stating that the bank had the burden of establishing ownership of the note and the mortgage under the UCC at the time it filed suit); see also Deutsche Bank, 2014-NMCA-___, ¶ 8 (stating that in order to demonstrate standing in a foreclosure case, a lender must establish at the time of the complaint: “(1) a right to enforce the note, which represents the debt, and (2) ownership of the mortgage lien upon the debtor’s property”). The standing issue in this case pivots on whether the Bank demonstrated that it was entitled to enforce the note.

{9} The right to enforce negotiable instruments, which include notes for home loans like that of Homeowner, is governed by the UCC. See Bank of N.Y., 2014-NMSC-007, ¶ 19 (stating that notes for home loans are negotiable instruments and that the UCC governs enforcement of negotiable instruments). To establish the right to enforce Homeowner’s note under the UCC, the Bank was required to prove that at the time suit was filed, it was: “(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument.” NMSA 1978, § 55-3-301 (1992). Because the Bank asserted in its complaint that it was a “holder in due course[,]” and on appeal argues that it was a holder,^[1] we consider only whether the Bank had standing to bring suit as a holder, the first of the three ways to establish the right to enforce a negotiable instrument under the UCC.

{10} “Holder” is a term of art within the UCC. While it is necessary to possess a negotiable instrument to qualify as a holder, possession of a negotiable instrument is not of itself necessarily sufficient. See Bank of N.Y., 2014-NMSC-007, ¶ 21 (“The first requirement of being a holder is possession of the instrument. However, possession is not necessarily sufficient to make one a holder.” (internal quotation marks and citation omitted)). Because Homeowner’s note was originally made payable to Countrywide, not the Bank, this case concerns a non-payee to a note asserting the right to enforce as a holder. The UCC provides two paths by which a third party to a note can establish the right to enforce as a holder: (1) possession of the note properly indorsed specifically to the third party; or (2) possession of the note properly indorsed in blank—that is, properly indorsed but not to an identified person or entity. See NMSA 1978 § 55-1-201(b)(21) (2005) (stating that a holder is a person in possession of a negotiable instrument payable: (1) to bearer, or (2) to an identified person and who is that person); see § 55-1-201(b)(5) (identifying bearer paper as a negotiable instrument that has an indorsement in blank).

{11} The Bank argues that because it attached the assignment of mortgage made to the Bank by MERS that the Bank was entitled to enforce the note. This is not consistent with Bank of N.Y., which was decided by our Supreme Court while this case was pending. In Bank of N.Y., our Supreme Court concluded that MERS “is merely a nominee for [the lender] in the underlying [m]ortgage” and, as such, “lacked any authority to assign [the homeowners’] note.” 2014-NMSC-007, ¶ 35 (internal quotation marks omitted). The Court observed that a note and a mortgage serve distinct contractual functions—the note is the debt while the mortgage is a pledged security for the debt. Id. ¶ 17. Accordingly, the MERS assignment of mortgage to the Bank was ineffective to establish the Bank’s right to enforce the note.

{12} Neither the Bank’s attachment of a copy of Homeowner’s note, indorsed in blank, to its September 22, 2011 pleading nor its production of that note at the summary judgment hearing on July 17, 2012 established the Bank’s standing to bring the suit for foreclosure against Homeowner on July 6, 2011. Under the UCC, possession of a note properly indorsed in blank establishes the right to enforce that note. See id. ¶ 24 (stating a blank indorsement makes the negotiable instrument bearer paper and therefore payable to the person who is in possession). But again, in order to establish standing to bring a suit for foreclosure, the right to enforce the note must be established at the time the complaint is filed. See id. ¶ 17 (“Standing is to be determined as of the commencement of the suit . . . . the [bank] had the burden of establishing timely ownership of the note and the mortgage to support its entitlement to pursue a foreclosure action.” (alteration, internal quotation marks, and citation omitted)). In Deutsche Bank, we concluded that a note with an undated indorsement in blank, which was not produced at the time the complaint was filed, but only at trial, was insufficient to establish a bank’s standing to foreclose. 2014-NMCA-___, ¶ 13. As in Deutsche Bank, the Bank’s failure to establish that it had the right to enforce Homeowner’s note as of the date the complaint for foreclosure was filed constitutes a failure to establish the Bank’s standing to bring the suit and a jurisdictional defect.

{13} Because the Bank failed to establish that it had the right to enforce Homeowner’s note as of the time of the complaint, the Bank lacked standing to file a suit for foreclosure against Homeowner.

CONCLUSION

{14} The district court order is reversed, and this case is remanded for further proceedings consistent with this Opinion.

{15} IT IS SO ORDERED.

JAMES J. WECHSLER, Judge and TIMOTHY L. GARCIA, Judge, concurs.

[1] Holders in due course under the UCC are a subset of holders who “took the instrument (i) for value, (ii) in good faith, [and] (iii) without notice that the instrument is overdue or has been dishonored[,]” among other requirements. NMSA 1978, Section 55-3-302(a)(2) (1992). Holders in due course are immunized from certain “personal defenses” generally available to the maker of a note. See Cadle Co., Inc. v. Wallach Concrete, Inc., 1995-NMSC-039, ¶ 8, 120 N.M. 56, 897 P.2d 1104. We do not consider the Bank’s assertion of holder in due course status because the parties ignore it and because disposition of the case does not require our consideration thereof.