DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

SONIA J. SANCHEZ and HECTOR L. SANCHEZ,
Appellants,

v.

SUNTRUST BANK, et al.,
Appellees.

No. 4D14-2457

[November 25, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Jack Schramm Cox, Judge; L.T. Case No. 2010CA000680
XXXXMB.

Reid C. McCullough, Kendrick Almaguer, Peter Ticktin and Josh Bleil
of The Ticktin Law Group, P.A., Deerfield Beach, for appellants.

Adam M. Topel, Jacob E. Mitrani and Frank P. Cuneo of Liebler,
Gonzalez & Portuondo, Miami, for appellee Suntrust Bank.

KLINGENSMITH, J.

Sonia J. Sanchez and Hector L. Sanchez (“appellants”) appeal the trial
court’s final judgment of foreclosure in favor of Suntrust Bank (“appellee”).
They argue that the trial court abused its discretion by admitting certain
documents into evidence under the business records exception. These
documents include: a screenshot of a computerized record keeping
system; the payment history; two default letters; the collection notes; and
a payoff calculation. We agree with appellants and reverse.

Appellants executed a promissory note and mortgage with Suntrust
Mortgage LLC (“Suntrust Mortgage”), a wholly owned subsidiary of
appellee and the servicer of appellants’ loan, in June 2006. In January
2010 appellee filed its initial complaint, but failed to attach the note.
Later, in May 2010, appellee filed the original note which contained an
undated, blank endorsement from Suntrust Mortgage.

At trial, appellee called an employee of Suntrust Mortgage to testify on
various matters. During his testimony, he was also asked to authenticate
several documents intended for admission into evidence as business
records. He explained that his job required him to review appellee’s
foreclosure files and internal systems, and that he typically reviewed the
note, mortgage, breach letter, and payment history before attending trial.
He also testified that he was familiar with three separate record keeping
systems utilized by both Suntrust Mortgage and appellee.

The note in this case contained a blank endorsement, and the witness
explained that he knew the blank endorsement was placed on the note
prior to the filing of the initial complaint because it was appellee’s policy
to endorse notes upon receiving them after execution. Reading from the
screenshot, which he stated was taken from “the system . . . used by our
vault people to keep track of any original documents,” he testified that the
note was endorsed in blank three days after the promissory note and
mortgage were executed, and over three years before suit was filed.

The trial court admitted the screenshot under the business records
exception, over appellants’ objection claiming lack of foundation and
hearsay. Subsequently, appellee also successfully moved the payment
history, default letters, collection notes, and payoff calculation into
evidence on the same grounds, over appellants’ same objections.

As we have held in the past:

The business records exception, found in section 90.803(6),
Florida Statutes (2013), allows a party to introduce evidence
that would normally be inadmissible hearsay if:

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

Peuguero v. Bank of Am., N.A.,

169 So. 3d 1198

, 1201 (Fla. 4th DCA 2015)
(quoting Yisrael v. State,

993 So. 2d 952

, 956 (Fla. 2008)).

In this case, counsel for appellee did not question the witness as to
whether each exhibit was “made at or near the time of the event” that it
described. Id. (quoting Yisrael, 993 So. 2d at 956). Because this element
was not established, admitting appellee’s documents into evidence under
the business records exception was error.

Additionally, it does not appear that appellee’s witness was qualified to
lay the proper foundation for the introduction of the screenshot.
Regarding who is qualified to testify for the purpose of authenticating
business records, we have stated:

[T]he the fact that a witness employed all the “magic words” of
the exception does not necessarily mean that the document is
admissible as a business record. Yang v. Sebastian Lakes
Condo. Ass’n,

123 So. 3d 617

, 621–22 (Fla. 4th DCA 2013).

To lay a foundation for the admission of a business record,
it is not necessary for the proponent of the evidence to call the
person who actually prepared the business records. Cooper
v. State,

45 So. 3d 490

, 492 (Fla. 4th DCA 2010). “The records
custodian or any qualified witness who has the necessary
knowledge to testify as to how the record was made can lay
the necessary foundation.” Twilegar v. State,

42 So. 3d 177

,
199 (Fla. 2010) (quoting Forester v. Norman Roger, Jewell &
Brooks Int’l, Inc.,

610 So. 2d 1369

, 1373 (Fla. 1st DCA 1992)).
Stated another way, “the witness just need be well enough
acquainted with the activity to provide testimony.” Cayea v.
CitiMortgage, Inc.,

138 So. 3d 1214

, 1217 (Fla. 4th DCA 2014).
“To the extent the individual making the record does not have
personal knowledge of the information contained therein, the
second prong of the predicate requires the information to have
been supplied by an individual who does have personal
knowledge of the information and who was acting in the
course of a regularly conducted business activity.” Brooks v.
State,

918 So. 2d 181

, 193 (Fla. 2005), receded from on other
grounds by State v. Sturdivant,

94 So. 3d 434

(Fla. 2012).

Landmark Am. Ins. Co. v. Pin-Pon Corp.,

155 So. 3d 432

, 441 (Fla. 4th DCA
2015).

In the context of a foreclosure action, a representative of a loan servicer
testifying at trial is not required to have personal knowledge of the
documents being authenticated, but must be familiar with and have
knowledge of how the “company’s data [is] produced.” Glarum v. LaSalle
Nat’l Ass’n,

83 So. 3d 780

, 783 (Fla 4th DCA 2011); see also Cayea, 138
So. 3d at 1217 (“Printouts of data prepared for trial may be admitted under
the business records exception even if the printouts themselves are not
kept in the ordinary course of business so long as a qualified witness
testifies as to the manner of preparation, reliability, and
trustworthiness.”). If a representative of a servicing agent testifying at trial

knows “how the data was produced,” and is “familiar with the bank’s
record-keeping system and ha[s] knowledge of how the data was uploaded
into the system,” the business records exception is satisfied. Weisenberg
v. Deutsche Bank Nat’l Trust Co.,

89 So. 3d 1111

, 1112-13 (Fla. 4th DCA
2012).

Although the witness had seen screenshots like the one entered into
evidence before, he did not know anything about the process by which they
were created, and admitted that the screenshot was not generated by any
of the three servicing systems he was acquainted with. Finally, he stated
that he believed the screenshot accurately reflected the date the
endorsement was placed on the note based entirely upon a conversation
he had with another employee he could identify only by first name. On
these facts it cannot be said that this witness had sufficient knowledge to
lay the foundation for the admission of the screenshot into evidence under
the business records exception. See Ensler v. Aurora Loan Servs., No.
4D14-351,

2015 WL 6496304

, at *2 (Fla. 4th DCA Oct. 28, 2015) (stating
that a “‘witness’s general testimony that a prior note holder follows a
standard record-keeping practice, without discussing details to show
compliance with section 90.803(6), is not enough to establish a foundation
for the business records exception.’” (quoting Holt v. Calchas, LLC, 155 So.
3d 499, 505 (Fla. 4th DCA 2015))).

Even if the screenshot had been properly admitted into evidence under
the business records exception, this would have established only Suntrust
Mortgage’s standing to foreclose, not appellee’s standing to bring this
action. Although the witness provided testimony that Suntrust Mortgage
placed the blank endorsement on the note before appellee filed suit, he did
not state when appellee, the foreclosing party that actually filed the initial
complaint, came into possession of the note.

“[P]ossession of the original note, indorsed in blank, [is] sufficient under
Florida’s Uniform Commercial Code to establish that [a party is] the lawful
holder of the note, entitled to enforce its terms.” Riggs v. Aurora Loan
Servs., LLC,

36 So. 3d 932

, 933 (Fla. 4th DCA 2010). We have repeatedly
held that a party attempting to prove standing based upon possession of
a note reflecting an undated, blank endorsement must prove that it had
possession of the instrument at the time the initial complaint was filed.
See, e.g., Snyder v. JP Morgan Chase Bank, Nat’l Ass’n,

169 So. 3d 1270

,
1273 (Fla. 4th DCA 2015) (stating that where note contained an undated,
blank endorsement, “the plaintiff seeking to foreclose on a note must be in
possession of the note prior to institution of the suit, whether as the holder
or having the rights of the holder”). A failure to provide sufficient proof of
standing warrants reversal. See, e.g., Peoples v. Sami II Trust 2006-AR6,

No. 4D14-2757,

2015 WL 5948218

, at *2 (Fla. 4th DCA Oct. 14, 2015)
(reversing and remanding case for entry of final judgment in favor of
borrower where appellee failed to establish standing to foreclose); Synder,
169 So. 3d at 1274 (reversing and remanding where lender “did not prove
that it had possession of the note when it filed suit, and in fact showed
that it did not have possession”); Lloyd v. Bank of N.Y. Mellon,

160 So. 3d
513

, 515-16 (Fla. 4th DCA 2015) (reversing and remanding case for “entry
of a judgment in favor of the Defendants” where bank’s standing to
foreclose was not supported by competent substantial evidence).

Even though appellee’s witness claimed that Suntrust Mortgage was a
wholly owned subsidiary of appellee, the fact that a subsidiary may have
standing to foreclose does not automatically establish that its parent
company also has standing, absent evidence more substantial than a
witness’ testimony regarding the existence of a parent-subsidiary
relationship. As we recently noted:

The original lender under the note and mortgage was
Chase Bank, USA, N.A. There was no evidence that the note
and mortgage were ever transferred from Chase Bank to
JPMorgan Chase. Although there was testimony at trial that
Chase Bank is a wholly owned subsidiary of JPMorgan Chase,
“[a] parent corporation and its wholly-owned subsidiary are
separate and distinct legal entities. . . . As a separate legal
entity, a parent corporation . . . cannot exercise the rights of
its subsidiary.” Am. Int’l Group, Inc. v. Cornerstone Bus., Inc.,

872 So. 2d 333

, 336 (Fla. 2d DCA 2004); see also Federated
Title Insurers, Inc. v. Ward,

538 So. 2d 890

, 891 (Fla. 4th DCA
1989). Thus, ownership of the note by subsidiary Chase Bank
does not give parent corporation JPMorgan Chase the right to
enforce the note, absent evidence that JPMorgan Chase
acquired such a right through, for example, a purchase or
servicing agreement.

JPMorgan Chase argues that it did acquire servicing rights
over the loan prior to the filing of the complaint, relying on a
notice of servicing transfer filed in the court file. This
document is not competent evidence, however, because it was
never authenticated and admitted into evidence at trial.

Wright v. JPMorgan Chase Bank, N.A.,

169 So. 3d 251

, 251-52 (Fla. 4th
DCA 2015).

In this case appellee failed to lay a sufficient foundation for the
admission of its records into evidence under the business records
exception. Moreover, even if appellee had done so, the witness was not
qualified to lay the necessary foundation for admitting the screenshot into
evidence because he was not familiar with the system that generated that
document. Because this erroneously admitted evidence was necessary for
appellee to prove not only its standing to foreclose, but also the
outstanding balance on the loan and its compliance with the conditions
precedent to foreclosure as outlined in the mortgage, the final judgment
must be reversed for entry of judgment in favor of appellants.

Reversed and Remanded.

STEVENSON and LEVINE, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

ROSANNA GUZMAN and FRANCISCO GUZMAN,
Appellants,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for
INDYMAC INDX MORTGAGE LOAN TRUST 2004-AR8 Mortgage Pass-
Through Certificates Series 2004-AR8, et al.,
Appellees.

No. 4D14-2509

[November 25, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Mark E. Polen, Senior Judge; L.T. Case No. CACE-
10044959 (11).

Samuel D. Lopez of Samuel D. Lopez, P.A., Pembroke Pines, for
appellants.

Russell R. O’Brien and Manuel S. Hiraldo of Blank Rome LLP, Fort
Lauderdale, for appellee Deutsche Bank National Trust Company.

KLINGENSMITH, J.

Rosanna and Francisco Guzman (“appellants”) appeal a final
judgment of foreclosure in favor of Deutsche Bank National Trust
Company (“appellee”), and challenge appellee’s standing to bring suit.
They argue the trial court erred by ruling that appellee had standing to
foreclose because appellee did not provide evidence that it was in
possession of an allonge and a blank-endorsed note at the time it filed
the initial complaint. Because appellee failed to prove that it possessed
the right to foreclose when the initial complaint was filed, we reverse. We
see no need to address the other issues raised.

Appellants originally executed a mortgage agreement and promissory
note with Grimaldi Capital Funding (“Grimaldi”). After appellants
defaulted on their payments, appellee filed its initial complaint for
foreclosure attaching both the note and the mortgage on the property.
However, the attached note did not contain any endorsements, nor did
the documents reflect that there had been an assignment of the mortgage
from Grimaldi to appellee. Even though Count I of the complaint for
foreclosure alleged that appellee was the holder and owner of both the
note and mortgage, appellee brought a declaratory judgment action in
Count II against Grimaldi, admitting that it had doubts as to its rights in
the mortgage because Grimaldi had not executed an assignment of the
mortgage to appellee. Upon agreement of the parties, the trial court
dismissed the complaint with leave for appellee to file an amended
pleading.

Appellee then filed an amended complaint alleging only one count of
foreclosure against appellants and abandoning the count for declaratory
relief. This time, appellee claimed that Grimaldi had executed an allonge
bearing a special endorsement in favor of IndyMac Bank, F.S.B.
(“IndyMac”),1 which then later endorsed the note in blank. The note
bearing the blank endorsement from IndyMac, the allonge, and the
mortgage were all attached to the amended complaint. Neither the
special endorsement on the allonge nor the blank endorsement on the
note was dated.2

During the non-jury trial, a loan analyst for appellee’s servicer, Ocwen
Loan Servicing (“Ocwen”), testified for appellee. Ocwen held all of the
records regarding appellant’s loan, which it had acquired from the prior
servicer, IndyMac. The analyst could not provide dates for when the
allonge containing the special endorsement from Grimaldi to IndyMac
was created, or for when IndyMac placed the blank endorsement on the
back page of the note. Moreover, when the trial judge asked appellee’s
counsel how the court could be certain that the allonge and the blank
endorsement were not created between the time the initial complaint was
filed and the time the amended complaint was filed, counsel responded
that he could not prove that both the allonge and the blank endorsement
predated the filing of the initial complaint, or that appellee possessed the
note and mortgage prior to filing the initial complaint.

1IndyMac became involved with the property as the servicer for the loan, and
was the entity that sent the default letter to appellants after they stopped
making their mortgage payments.

2 The blank endorsement from IndyMac appears to be on a separate, otherwise
blank page. However, testimony elicited during the trial revealed that this page
was really the back-side of the fourth page of the note. No explanation was ever
offered for why the endorsements were not both placed on the allonge, or, in the
alternative, both placed on the back of the fourth page.

Counsel for appellee argued that these documents were in appellee’s
possession at the time the amended complaint was filed, and because the
allonge and note were attached to the amended complaint, they related-
back to the date of the initial complaint’s filing, thus establishing
appellee’s standing to foreclose. The trial court accepted appellee’s
relation-back argument, ruled that appellee had standing to bring suit,
and rendered final judgment of foreclosure in favor of appellee. This was
error.

In a foreclosure action, a “‘plaintiff must prove that it had standing to
foreclose when the complaint was filed.’” Vidal v. Liquidation Props., Inc.,

104 So. 3d 1274

, 1276 (Fla. 4th DCA 2013) (quoting McLean v. JP
Morgan Chase Bank Nat’l Ass’n,

79 So. 3d 170

, 173 (Fla. 4th DCA 2012)).
A party must prove it has “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,

155 So. 3d 444

, 446 (Fla. 4th DCA 2015) (citing
McLean, 79 So. 3d at 173).

For a plaintiff to qualify as a holder of a promissory note, the note
must either list the plaintiff as the payee, or it “must bear a special
endorsement in favor of the plaintiff or a blank endorsement.” McLean,
79 So. 3d at 173. Where a promissory note filed after the initial
complaint 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.” See id.
This evidence may be supplied by witness testimony at trial. Lamb v.
Nationstar Mortg., LLC, No. 4D13-3125,

2015 WL 4930268

, at *1 (Fla. 4th
DCA Aug. 19, 2015) (“‘A witness who testifies at trial as to the date a
bank became the owner of the note can serve the same purpose as an
affidavit of ownership.’” (quoting Sosa v. U.S. Bank Nat’l Ass’n, 153 So.
3d 950, 951 (Fla. 4th DCA 2014))).

“[P]ossession of the original note, indorsed in blank, [is] sufficient
under Florida’s Uniform Commercial Code to establish that [a party is]
the lawful holder of the note, entitled to enforce its terms.” Riggs v.
Aurora Loan Servs., LLC,

36 So. 3d 932

, 933 (Fla. 4th DCA 2010).
Therefore, to enforce a note endorsed in blank, a foreclosing party must
show that they had possession of the note at the inception of the lawsuit.

Alternatively, foreclosing parties may present an allonge to establish
standing. “‘An allonge is a piece of paper annexed to a negotiable
instrument or promissory note, on which to write endorsements for
which there is no room on the instrument itself. Such must be so firmly
affixed thereto as to become a part thereof.’” Seffar v. Residential Credit
Solutions, Inc.,

160 So. 3d 122

, 125 (Fla. 4th DCA 2015) (quoting Booker
v. Sarasota, Inc.,

707 So. 2d 886

, 887 n.1 (Fla. 1st DCA 1998)). “If the
note or allonge reflects on its face that the endorsement occurred before
the filing of the complaint, this is sufficient to establish standing.”
McLean, 79 So. 3d at 174.

Appellee argues that the note attached to the initial complaint
actually had the endorsement on the back of it, proving that it had
standing at the time it filed the initial complaint. Here, it is undisputed
that there were no endorsements on the note attached to appellee’s initial
complaint, and no affixed allonges. When appellee filed its amended
complaint, it attached for the first time a copy of the note bearing an
undated blank endorsement from IndyMac, and an allonge bearing an
undated special endorsement from Grimaldi to IndyMac.

No evidence was presented at trial, either documentary or testimonial,
that the blank endorsement from IndyMac was present on the back of
the note attached to the initial complaint. Moreover, the analyst never
testified as to when the endorsements were placed on the allonge or the
original note, and therefore did not provide any evidence that the
endorsements predated the filing of the initial complaint or that appellee
possessed the endorsed documents before it was filed. When specifically
asked if appellee acquired the blank note prior to the filing of the initial
complaint, the analyst responded:

There is no evidence to indicate to the contrary. I mean it
has always been part of the trust. This one has always been
part of the trust. . . .

….

. . . I believe our [business] records speak for themselves.
. . . I don’t have specific documents that would say that, you
know, when all of this stuff happened. I don’t have that with
me today.

Because neither the note attached to the initial complaint in the
appellate record nor the other documents in evidence prove that the
blank endorsement from IndyMac was on the back of the fourth page of
the note when the initial complaint was filed, this court cannot
independently draw the conclusion that it was, in fact, there. We have
held repeatedly that a party cannot establish standing after it has filed
its initial complaint. See, e.g., LaFrance v. U.S. Bank Nat’l Ass’n,

141 So.

3d 754, 756 (Fla. 4th DCA 2014) (“A ‘plaintiff’s lack of standing at the
inception of the case is not a defect that may be cured by the acquisition
of standing after the case is filed’ and cannot be established ‘retroactively
by acquiring standing to file a lawsuit after the fact.’” (quoting McLean,
79 So. 3d at 173)).

Allowing documents attached to an amended complaint which purport
to prove standing to be given retroactive effect back to the date of original
filing, as appellee urges us to do here, would be inimical to the
requirements of pre-suit ownership for standing in foreclosure cases.
See Progressive Express Ins. Co. v. McGrath Cmty. Chiropractic, 913 So.
2d 1281, 1286 (Fla. 2d DCA 2005) (stating that the “relation back” rule
found in Florida Rule of Civil Procedure 1.190(c) “does not permit a party
to establish the right to maintain an action retroactively by acquiring
standing to file a lawsuit after the fact”).

We have confirmed the well-settled principle that standing is acquired
at the inception of the lawsuit in several opinions. As we stated in one
recent case under somewhat analogous facts:

Here, the Trust alleged standing as owner and holder of
the note and mortgage in both the original and amended
complaint. Because it was not the original named payee, it
had to prove possession of the original note endorsed in its
favor or in blank before the filing of the original complaint.
When the Trust filed the original complaint, it attached a copy
of an unendorsed note payable to AWL. Although it later filed
an original note and a copy of the original note, both of which
had a blank endorsement, neither was dated. And, the
Trust’s witness did not know when the endorsement was
placed on the note.

….

From the sequence of these events, it is clear that the
Trust did not have standing when it filed the complaint in
September 2007. Wright v. Deutsche Bank Nat’l Trust Co.,

152 So. 3d 1289

(Fla. 4th DCA 2015). The trial court erred
in entering a final judgment of foreclosure in favor of the
Trust.

Peoples v. Sami II Trust 2006-AR6, No. 4D14-2757,

2015 WL 5948218

, at
*2 (Fla. 4th DCA Oct. 14, 2015) (emphasis added).

Since there is no evidence to support appellee’s contention that the
endorsements in question were on the allonge and the note prior to the
inception of the lawsuit, or that appellee was in possession of these
endorsed documents when the initial complaint was filed, appellee has
failed to demonstrate that it had standing to bring this foreclosure suit.

Reversed.

DAMOORGIAN and LEVINE, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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REUTERS-

Pacific Investment Management Co and other investors have sued Citigroup Inc over the bank’s alleged failure to properly monitor toxic securities backed by more than $13.8 billion of mortgage loans, resulting in $2.3 billion of losses.

According to a complaint filed Tuesday night in a New York state court in Manhattan, Citigroup breached its duties as trustee for the 25 private-label trusts dating from 2004 to 2007 by ignoring “pervasive and systemic deficiencies” in how the underlying loans were underwritten or being serviced.

The investors said Citigroup looked askance at the loans’ “abysmal performance” out of fear it might “jeopardize its close business relationships” with loan servicers including Wells Fargo & Co and JPMorgan Chase & Co, or prompt them to retaliate over its own problem loans.

Read more at Reuters http://www.reuters.com/article/2015/11/25/us-citigroup-pimco-lawsuit-idUSKBN0TE2MC20151125#0ZRYzAJDKTxDW2J5.99

ABA JOURNAL-

Wiring a federal agent or informant would have been legal.

But the feds crossed the line by secretly installing microphones in at least three locations outside a California courthouse in 2009 and 2010 and eavesdropping on private conversations, says a motion. It was filed by defendants in a criminal case over claimed manipulation of foreclosure sales by real estate investors to drive down prices, reports the Recorder (sub. req.). The filing seeks to prevent the use of hundreds of hours of recorded evidence against the defendants.

With the OK of the Department of Justice and FBI lawyers, the government made the warrantless recordings with electronic bugs hidden in a planter, a wall-mounted metal sprinkler box and vehicles parked near an entrance to the San Mateo County courthouse in Redwood City, the defendants allege. This violated the defendants’ Fourth Amendment rights, says a motion to suppress (PDF) filed Friday in the San Francisco federal court case.

[ABA JOURNAL]

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER

———————————————-
Wells Fargo Bank. N.A.,
Plaintiff.

-against-

John C. Belknap alk/a John Belkna; M. Alison Belknap
a/k/a M. Belknap; et aI.,
Defendants.

<snip>

Plaintiffs Standing to Bring This Action

Where, as here, standing is put into issue by defendants, plaintiff must prove its standing
in order to be entitled to relief (U.S. Bank. N.A. v Adrian Collymore, 68 AD3d 752 [2d Dept
2009)). In a mortgage foreclosure action, “a plaintiff has standing where it is both the holder or
assignee of the subject mortgage and the holder or assignee of the underlying note at the time the
action is commenced” (Bank of New York v Silverberg, 86 AD3d 274, 279 [2d Dept 2011]).
Once a promissory note is tendered to and accepted by an assignee, the mortgage passes as an
incident to the note (Mortgage Elec. Registration Sys” Inc. v. Coakley, 41 A.D.3d 674, Bank of
New York v Silverberg, 86 AD3d 274, 280 [2d Dept 201 1)). By contrast, “a transfer of the
mortgage without the debt is a nullity, and no interest is acquired by it. A mortgage is merely
security for a debt or other obligation and cannot exist independently of the debt or obligation.
Consequently, the foreclosure of a mortgage cannot be pursued by one who has not demonstrated
“right to the debt” (Bank of New York v Silverberg, 86 AD3d 274, 280 [2d Dept 2011]).
Moreover, an assignment of a note and mortgage need not be in writing and can be effectuated by
physical delivery (LaSalle Bank Natl. Assn. v. Ahearn, 59 A.D.3d 911, 912, [3d Dept 2009]).
Plaintiff establishes its lawful status as assignee, either by written assignment or physical
delivery, prior to the filing of the complaint (Aurora Loan Services, LLC v Weisblum, 85 AD3d
95 [2d Dept 20 ID. Written assignment of the underlying note or physical delivery of the note
prior to the commencement of the action is sufficient to transfer the obligation (HSBC Bank
USA, Nat. Ass’n v Gilbert, 120 AD3d 756, 757 [2d Dept 2014]), An assignment ofa mortgage
without assignment of the underlying note or bond is a nullity. and no interest is acquired by it
(HSBC Bank USA v, Hernandez, 92 A,D,3d 843 [2d Dept 2012]), Further. the affidavit from the
plaintiff or its servicing agent must include specific factual details of a physical delivery of the
note to establish that the plaintiff had physical possession of the note prior to commencing an
action (HSBC Bank USA v. Hernandez. 92 AD3d 843. 844. (2d Dept 2012]).

If the plaintiff asserts standing based upon a written assignment executed after the
commencement of the action. the plaintiff must also prove physical delivery of the note before
commencement (Wells Fargo Bank. N.A. v. Marchione. 69 AD3d 204, 210. [2d Dept. 2009)).
Indeed, where the plaintiff “establish[ esJ its standing as the holder of the note and mortgage by
physical delivery prior to commencement of the action,” it is unnecessary to “address the validity
of [a] subsequently executed document assigning the mortgage and note” (Deutsche Bank Natl.
Trust Co. v Whalen. 107 AD3d 931,932 [2d Dept 2013]).

In considering standing, a court must consider the negotiability of the promissory note.
Pursuant to ucc ~ 3-202, negotiation is defined as the transfer of an instrument in such form
that the transferee becomes a holder. ucc ~ 3-204 provides that a special indorsement specifies
the person to whom or to whose order the instrument is payable (Ucc ~ 3-204[1]). Pursuant to
ucc ~3-204(2): “An indorsement in blank specifies no particular indorsee and may consist of a
mere signature. An instrument payable to order and indorsed in blank becomes payable to bearer
and may be negotiated by delivery alone until specially indorsed.” The indorsement must be
made either on the face of the note or on an allonge so firmly affixed to the note as to become a
part thereofUeC Section 3-202(20).

[…]

H/T Clouded Titles

Word is out on the street that a Boca Raton business claiming to be “an industry leader in foreclosure and pre-foreclosure litigation in South Florida” is under criminal investigation by Florida authorities (specifically, the State Economic Crimes Unit) for unauthorized practice of law among other allegations.

The group, posturing itself as an “asset protection group” recently posted what appears to be a promotional report entitled, “Florida Asset Protection Group Defends Distressed Homeowners Against Quiet Title Action”, dated November 23, 2015.  The post, in part, claims that this firm is here to keep Florida homeowners from being ripped off by unscrupulous scam operators  across the State in quiet title actions:

“There are always people and companies looking to take advantage of others, and when this occurs the best choice is to contact Florida Asset Protection Group.  The team at FAPG firmly believes that businesses have an obligation to help support and educate the communities and protect them against predatory scams such as these, can be avoided. For more information about Florida Asset Protection Group visit www.floridaassetprotectiongroup.com.”

[CLOUDED TITLES]

Lexology-

Bankruptcy practitioners routinely advise secured creditor clients to file protective proofs of claim in bankruptcy proceedings despite those clients’ ability to ignore bankruptcy proceedings and decline filing claims without imperiling their lien due to the protections afforded by state law foreclosure rights.[1] But a recent Ninth Circuit decision is causing attorneys and clients to reconsider whether this traditionally conservative approach is simply too risky in Chapter 13 cases. HSBC Bank v. Blendheim (In re Blendheim), No. 13-35412, 2015 WL 5730015 (9th Cir. Oct. 1, 2015).

The Blendheims filed for Chapter 13 relief after receiving a Chapter 7 discharge, making them what is commonly referred to as “Chapter 20” debtors. Holding a first-position lien secured by the Blendheims’ West Seattle condominium, HSBC filed a timely proof of claim, to which the Blendheims filed an objection. HSBC did not respond, and hearing no response, the court entered an order disallowing HSBC’s claim. HSBC was served with the order, but continued to take no action until several months later when the Blendheims filed an adversary proceeding seeking, among other things, to void HSBC’s first-position lien pursuant to Bankruptcy Code § 506(d). Section 506(d) provides that “[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void.”

[LEXOLOGY]

Decided and Entered: November 19, 2015

519429

Calendar Date: September 10, 2015
Before: Lahtinen, J.P., Garry, Lynch and Devine, JJ.; Egan Jr., J., vouched in.

Barbara A. Hill and Robert W. Hill, Coral Gables, Florida, appellants pro se.

Buckley Madole, PC, Rochester (Michael T. Ansaldi of counsel), for respondent.

Lynch, J.

MEMORANDUM AND ORDER

Appeal from an order of the Supreme Court (LaBuda, J.), entered April 14, 2014 in Sullivan County, which, among other things, granted plaintiff’s motion for summary judgment.

In October 2004, defendants Barbara A. Hill and Robert W. Hill (hereinafter collectively referred to as defendants) executed a note in favor of BNY Mortgage Company, LLC to borrow the sum of $132,664 to purchase property located in the Village of Monticello, Sullivan County. The debt was secured by a mortgage on the property. When defendants stopped making monthly

payments, plaintiff commenced this action in February 2013 to foreclose on the mortgage. Supreme Court scheduled a settlement conference (see CPLR 3408; 22 NYCRR 202.12-a), but defendants did not appear. Thereafter, with the court’s permission, plaintiff moved for summary judgment and defendants cross-moved for, among other things, an order directing plaintiff to produce the “wet-ink” note. The court granted plaintiff’s motion, denied defendants’ cross motion and defendants now appeal.

In a foreclosure action, a plaintiff seeking summary judgment “must produce evidence of the mortage and unpaid note along with proof of the mortgagor’s default” (Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]; see HSBC Bank USA, N.A. v Sage, 112 AD3d 1126, 1127 [2013], lvs dismissed 22 NY3d 1172 [2014], 23 NY3d 1015 [2014]). Plaintiff supported its motion with the required documentation, but because the self-represented [*2]defendants raised the issue of standing in their answer, plaintiff was also obligated to demonstrate that it was a holder or assignee of the note and subject mortgage at the time the action was commenced (see Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376; Chase Home Fin., LLC v Miciotta, 101 AD3d 1307, 1307 [2012]). It is the note, not the mortgage, that is the dispositive instrument that conveys standing to foreclose under New York law (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361 [2015]).

Here, plaintiff maintains that it has standing because it obtained physical possession of the note prior to commencement of the action. “Since the note has only an undated indorsement in blank from the original lender, it does not evidence plaintiff’s possessory interest” (Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738-739 [2015] [citation omitted]; see Bank of Am., N.A. v Kyle, 129 AD3d 1168, 1169 [2015]), nor, for that matter, does the June 2012 assignment of the mortgage from the Mortgage Electronic Registration Systems, Inc. confer standing (see id.). To establish physical possession, plaintiff produced an affidavit by an assistant secretary, who stated that plaintiff’s “custodial system of record” showed that plaintiff “received the original [n]ote on February 16, 2007” and that plaintiff maintained “possession of the [n]ote at its storage facility” in Monroe, Louisiana. Noticeably absent is any representation by the assistant secretary that she examined the original note and, contrary to the dissent, the affidavit is devoid of any detail as to how plaintiff actually acquired possession of the original note (compare Aurora Loan Servs., LLC v Taylor, 25 NY3d at 362; Deutsche Bank Natl. Trust Co. v Monica, 131 AD2d at 739). Moreover, the dissent’s reliance on HSBC Bank USA, N.A. v Sage (supra) is misplaced, for the question here is not, as it was in that case, whether plaintiff’s representative had personal knowledge as to the creation of the original loan documents, but whether any direct evidence was presented detailing how plaintiff came into actual possession of the original note. The plaintiff in HSBC Bank USA had already established that the custodian of the trust had actual possession of the note for over two years prior to commencement of the action (id. at 1127-1128). Even accepting that plaintiff met its burden of proving physical possession of the note through the assistant secretary’s review of plaintiff’s custodial records, in opposition, defendants cross-moved for an order directing plaintiff to produce the original or “wet-ink” note, as described by defendants. Defendants made the same demand in their answer.

In Aurora Loan Servs., LLC v Taylor (25 NY3d at 361-362), the Court of Appeals recently addressed the degree of proof necessary to show possession of a note for purposes of standing. In that case, the plaintiff’s representative averred, upon review of its business records and after examining the original note, that it had custody of the note prior to the commencement of the action. The defendants countered that more detail was required as to how the plaintiff acquired the note. While observing that “the better practice would have been for [the plaintiff] to state how it came into possession of the note,” the Court determined that the trial court did not err in granting summary judgment to the plaintiff without requiring production of the original note, emphasizing that no such demand had been made (id. at 362). Not to be overlooked is the fact that the allonge indorsing the note to the plaintiff in Aurora showed a specific chain of ownership to the plaintiff (id. at 359). Here, by comparison, the original note includes only a blank indorsement, the affidavit of the assistant secretary is based on a review of system records without an examination of the original note and defendants demanded production of the original note from the outset. Defendants also represent that a prior foreclosure action was commenced by defendant Bank of New York in 2008 — a year after plaintiff ostensibly obtained possession of the original note — and discontinued in 2010, without prejudice. Given this context, and without any verification as to how plaintiff came into possession of the note, we conclude that Supreme Court should have first compelled it to produce the original note prior to resolving plaintiff’s motion for summary judgment. This is particularly so given the responding affidavit of plaintiff’s representative that it was “ready, wiling (sic) and able to produce the original ‘wet-ink’ note for [*3]inspection” — a representation repeated in plaintiff’s brief on appeal.

Garry and Egan Jr., JJ., concur.
Devine, J. (dissenting).

Our colleagues find that questions of fact exist as to whether plaintiff actually possesses the note; we do not, and, therefore, respectfully dissent.

Plaintiff undoubtedly “produce[d] evidence of the mortgage and unpaid note along with proof of the mortgagor’s default” (Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]; see HSBC Bank USA, N.A. v Sage, 112 AD3d 1126, 1127 [2013], lvs dismissed 22 NY3d 1172 [2014], 23 NY3d 1015 [2014]). Because defendants Barbara A. Hill and Robert W. Hill (hereinafter collectively referred to as defendants) raised standing as an affirmative defense, plaintiff was further required to show that it was “both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action [was] commenced” (Chase Home Fin., LLC v Miciotta, 101 AD3d 1307, 1307 [2012]; see Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376). Plaintiff submitted a copy of the mortgage that was assigned to it and a copy of the promissory note indorsed in blank, but a blank indorsement “does not evidence plaintiff’s possessory interest” in the note and requires proof of actual possession (Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738-739 [2015]; see UCC 3-204 [2]; Bank of Am., N.A. v Kyle, 129 AD3d 1168, 1169 [2015]).

In that regard, plaintiff provided an affidavit by an assistant secretary, who averred that she reviewed plaintiff’s business records regarding the loan in question, that she was personally familiar with the maintenance of those records and that they had been created and kept in the regular course of business. Her affidavit “was adequately based on a review of the books and records of the company maintained in the ordinary course of business” under these circumstances and, contrary to the assertion of my colleagues, her “lack of personal knowledge as to the creation of the documents is not fatal” (HSBC Bank USA, N.A. v Sage, 112 AD3d at 1127; see CPLR 4518; compare Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 739 [records made by another entity]). The majority complains that this affidavit was deficient in failing to “detail . . . how plaintiff actually acquired possession of the original note,” but that issue is irrelevant, as “[a]n instrument payable to order and indorsed in blank becomes payable to bearer and may be negotiated by delivery alone until specially indorsed” (UCC 3-204 [2]). Possession, regardless of how that possession came about, is all that is required to make plaintiff a bearer and holder of a note indorsed in blank (see UCC 1-201 [b] [5], [21]; UCC 3-204 [2]; Getty Petroleum Corp. v American Express Travel Related Servs. Co., 90 NY2d 322, 328 [1997]; Bank of Am., N.A. v Kyle, 129 AD3d at 1169; Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376).

The records detailed as to how the original note came into plaintiff’s possession, and the assistant secretary averred with no hesitation that plaintiff “received the original [n]ote on” February 16, 2007 and “maintain[ed] possession of the [n]ote” at its storage facility in Louisiana. While we agree that “the better practice would have been for [plaintiff] to state how it came into possession of the note in its affidavit in order to clarify the situation completely” (Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 362 [2015]), plaintiff nevertheless met its initial burden by providing admissible proof showing that “physical delivery of the note was made to . . . [it upon an] exact delivery date” that predated the commencement of this action (Aurora Loan Servs., LLC v Taylor, 114 AD3d 627, 629 [2014], affd 25 NY3d 355 [2015]; see Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 738; Deutsche Bank Natl. Trust Co. v Whalen, 107 AD3d 931, 932 [2013]).

The burden accordingly shifted to defendants “to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action,” and they failed to do so (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Defendants primarily argued that the note was “altered, edited, [and] redacted,” and cross-moved for production of the original note. They made no specific allegations as to how the note had been altered, however, and no obvious changes or material redactions appear in the copy of the note provided. Their conclusory claims therefore constitute the type of “unsubstantiated allegations or assertions” that do not raise a question of fact (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; see Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533 [1991]). Inasmuch as defendants failed to submit any evidence to warrant “the requisite showing that [further] discovery would yield material and relevant evidence sufficient to defeat the motion” for summary judgment, production of the original note at this late date is not appropriate (Seton Health at Schuyler Ridge Residential Health Care v Dziuba, 127 AD3d 1297, 1300 [2015]; see CPLR 3212 [f]; Banque Nationale de Paris v 1567 Broadway Ownership Assoc., 214 AD2d 359, 361 [1995]; see also Aurora Loan Servs., LLC v Taylor, 25 NY3d at 362).

We perceive nothing in the other arguments advanced by defendants that would warrant a denial of summary judgment. Defendants suggested that something nefarious was afoot because plaintiff came into possession of the note in 2007, but was not assigned the mortgage until 2012. This assertion ignores the role of Mortgage Electronic Registration Systems, Inc., which previously held the mortgage (see Matter of MERSCORP, Inc. v Romaine, 8 NY3d 90, 96 [2006]), and also overlooks “that the note, and not the mortgage, is the dispositive instrument that conveys standing to foreclose under New York law” (Aurora Loan Servs., LLC v Taylor, 25 NY3d at 361). Moreover, while a mortgage foreclosure action had previously been commenced by defendant Bank of New York, that action was discontinued, and defendants provided nothing to suggest that the prior action in any way impaired plaintiff’s rights (see e.g. Credit-Based Asset Servicing & Securitization v Grimmer, 299 AD2d 887, 888 [2002]). The Bank of New York was served with the summons and complaint in this action given its status as a lienholder, and its failure to appear and assert any interest does not speak well of the insinuation by defendants that it has any rights to the note and mortgage at issue. Over five years have passed since the default in payment and, in the absence of any material issues of fact that would defeat an award of summary judgment, we perceive nothing to justify a further delay in the resolution of this matter.

Lahtinen, J.P., concurs.

ORDERED that the order is modified, on the law, with costs to defendants, by reversing so much thereof as granted plaintiff’s motion; said motion denied; and, as so modified, affirmed.

EDIT: Only their Foreclosure and Title division, which, Shapiro & Fishman acquired.

Had a tip earlier today that this was happening.

We will see.

.

Just last month it was announced the Tampa law firm Daniel C. Consuegra PL to lay off 150, close title company unit Consuegra Title LLC –

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The Federal Reserve Board on Thursday announced a plan to redistribute unclaimed funds under the Independent Foreclosure Review Payment Agreement to eligible borrowers who have cashed or deposited checks.  The plan covers borrowers of mortgage servicers regulated by the Federal Reserve.

The Independent Foreclosure Review Payment Agreement, overseen by the Federal Reserve and the Office of the Comptroller of the Currency, provided $3.9 billion for borrowers of 14 servicers whose homes were in any stage of the foreclosure process in 2009 or 2010.  As of October 2015, more than $3.5 billion had been cashed or deposited by eligible borrowers.  Borrowers of servicers regulated by the Federal Reserve have cashed or deposited checks with a value of $798 million as of mid-October, which amounts to approximately 91 percent of the total value of the payments issued to these borrowers.

Borrowers of servicers regulated by the Federal Reserve who have not yet cashed or deposited their original check have until December 31, 2015, to request a replacement check.  These borrowers must cash or deposit their checks by March 31, 2016.

In mid-2016, the Federal Reserve will direct the paying agent, Rust Consulting, Inc., to redistribute any funds remaining after March 31, 2016, to borrowers of these servicers who have previously cashed or deposited their original checks.  The Federal Reserve intends to distribute the maximum amount of funds to borrowers affected by deficient servicing and foreclosure practices.

Borrowers whose mortgages were serviced by one of the 14 servicers that entered into agreements in 2013 should call Rust Consulting, Inc. with questions at 888-952-9105, Monday through Friday between 9:00 a.m. and 8:00 p.m. EST or Saturday between 11:00 a.m. and 4:00 p.m. EST or visit http://www.independentforeclosurereview.com/ .

For media inquiries, call 202-452-2955.

Board Votes

Reuters-

Homeowners accusing mortgage servicer Ocwen Financial Corp of charging them unnecessary default-related fees are asking a U.S. appeals court to revive their lawsuit, arguing that they have adequately alleged a fraudulent scheme.

Filed last year in Los Angeles federal court by lawyer Daniel Alberstone on behalf of a group of homeowners across the nation, the suit accused Ocwen of opportunistically ordering and then charging property inspections to borrowers in default. It sought damages for violations of several California state and federal laws, including the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act.

Read more at Reuters http://www.reuters.com/article/2015/11/18/ocwen-appeal-idUSL1N13D0NG20151118#2LxI5khe1Jgomcl6.99

Decided on November 18, 2015 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department
WILLIAM F. MASTRO, J.P.
RUTH C. BALKIN
THOMAS A. DICKERSON
SHERI S. ROMAN, JJ.

2013-08677
(Index No. 3497/11)

Stephen C. Silverberg, PLLC, Uniondale, N.Y., for appellant.

Leopold & Associates, PLLC (Greenberg Traurig, LLP, New York, N.Y. [Daniel R. Milstein], of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Michael Idarecis appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), entered June 7, 2013, as granted those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against him, to strike his answer and his affirmative defenses, and for the appointment of a referee to compute the amount due.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendant Michael Idarecis, to strike the answer and affirmative defenses of the defendant Michael Idarecis, and for the appointment of a referee to compute the amount due are denied.

Where, as here, the plaintiff’s standing is placed in issue by the defendant’s answer, a plaintiff must prove its standing as part of its prima facie showing on a motion for summary judgment (see HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983; Loancare v Firshing, 130 AD3d 787, 789; Wachovia Mtge. Corp. v Lopa, 129 AD3d 830, 830-831). “A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that it is either the holder or assignee of the underlying note at the time the action is commenced” (HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d at 984; see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361; Loancare v Firshing, 130 AD3d at 789). ” The plaintiff may demonstrate that it is the holder or assignee of the underlying note by showing either a written assignment of the underlying note or the physical delivery of the note'” (HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d at 984, quoting U.S. Bank N.A. v Guy, 125 AD3d 845, 846-847).

Here, the plaintiff failed to establish, prima facie, that it had standing to commence the action. Since the affidavit submitted by the plaintiff did not set forth the date that the plaintiff obtained the note, the affidavit failed to establish that the plaintiff had physical possession of the note prior to commencing the action (see Flagstar Bank, FSB v Anderson, 129 AD3d 665, 665-666; Wells Fargo Bank, NA v Burke, 125 AD3d 765, 766-767; US Bank N.A. v Faruque, 120 AD3d 575, 577; cf. Aurora Loan Servs., LLC v Taylor, 114 AD3d 627, 628-629, affd 25 NY3d 355). While the copy [*2]of the note submitted by the plaintiff included an endorsement to the plaintiff, the endorsement is undated and, thus, it is unclear whether the endorsement was effectuated prior to the commencement of the action (see Flagstar Bank, FSB v Anderson, 129 AD3d at 666;Wells Fargo Bank, NA v Burke, 125 AD3d at 767; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 682-683). Although the written assignment of the mortgage submitted by the plaintiff was dated prior to the commencement of the action, that assignment only purported to assign the mortgage. The plaintiff failed to show that the note also was assigned at that time (see Flagstar Bank, FSB v Anderson, 129 AD3d at 666; Wells Fargo Bank, NA v Burke, 125 AD3d at 767; US Bank N.A. v Faruque, 120 AD3d at 577).

Accordingly, the Supreme Court should have denied those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendant Michael Idarecis, to strike the answer and affirmative defenses of the defendant Michael Idarecis, and for the appointment of a referee to compute the amount due, without regard to the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

MASTRO, J.P., BALKIN, DICKERSON and ROMAN, JJ., concur.

ENTER:Aprilanne AgostinoClerk of the Court

Decided on November 18, 2015

SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department
WILLIAM F. MASTRO, J.P.
RUTH C. BALKIN
THOMAS A. DICKERSON
SHERI S. ROMAN, JJ.

2014-10502
2015-02083
(Index No. 8942/12)

Law Office of Lawrence Katz PLLC, Cedarhurst, N.Y., for appellant.

McCabe, Weisberg & Conway, P.C., New Rochelle, N.Y., and Greenberg Traurig, LLP, New York, N.Y. (Michael A. Weiss of counsel), for respondent (one brief filed).

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Brian Weiss appeals, as limited by his brief, from (1) so much an order of the Supreme Court, Nassau County (Adams, J.), dated April 25, 2014, as granted those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against him and to appoint a referee to compute the amount due to the plaintiff, and (2) so much of an order of the same court, also dated April 25, 2014, as granted those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against him, to strike his answer, and to appoint a referee to compute the amount due to the plaintiff.

ORDERED that the appeal from the first order dated April 25, 2014, is dismissed, as that order was superseded by the second order; and it is further,

ORDERED that the second order dated April 25, 2014, is reversed insofar as appealed from, on the law, and those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendant Brian Weiss, to strike the answer of that defendant, and to appoint a referee to compute the amount due to the plaintiff are denied, and the first order dated April 25, 2014, is vacated; and it is further,

ORDERED that one bill of costs is awarded to the appellant.

“[I]n an action to foreclose a mortgage, a plaintiff establishes its case as a matter of law through the production of the mortgage, the unpaid note, and evidence of default” (Argent Mtge. Co., LLC v Mentesana, 79 AD3d 1079, 1080 [internal quotation marks omitted]; see Citimortgage, Inc. v Chow Ming Tung, 126 AD3d 841, 842; US Bank N.A. v Weinman, 123 AD3d 1108, 1109). “Where the issue of standing is raised by a defendant, a plaintiff must prove its standing in order to be entitled to relief” (HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983, 983; see Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753). A plaintiff has standing in a mortgage foreclosure action where it is the holder or assignee of the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361; HSBC Bank USA, N.A. v Spitzer, 131 AD3d 1206). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as [*2]an inseparable incident” (U.S. Bank, N.A. v Collymore, 68 AD3d at 754; see US Bank N. Assn. v Faruque, 120 AD3d at 577).

Here, the plaintiff failed to establish, prima facie, that it had standing to commence this action. The affidavit of an assistant secretary of the plaintiff’s loan servicer contained conclusory statements regarding the plaintiff’s possession of the note, without any factual details of a physical delivery, and thus, failed to establish that the plaintiff had physical possession of the note prior to commencing this action (see Flagstar Bank, FSB v Anderson, 129 AD3d 665, 665-666; US Bank N.A. v Faruque, 120 AD3d at 577; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 682; cf. Aurora Loan Servs., LLC v Taylor, 25 NY3d at 361). Although the assistant secretary of the plaintiff’s loan servicer stated in her affidavit that the plaintiff was the holder of the note, she never stated that the plaintiff was the holder of the note at the time the action was commenced (see Wells Fargo Bank, NA v Burke, 125 AD3d 765, 766-767; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754). Furthermore, the copy of the note submitted by the plaintiff merely contained an undated indorsement by the original lender to IndyMac Bank, F.S.B., and a second undated indorsement in blank (see Flagstar Bank, FSB v Anderson, 129 AD3d at 666; U.S. Bank, N.A. v Collymore, 68 AD3d at 754). Finally, the written assignment of mortgage to the plaintiff dated June 19, 2012, transferred only the mortgage and, thus, failed to demonstrate that the note also was assigned at that time (see Flagstar Bank, FSB v Anderson, 129 AD3d at 666;Wells Fargo Bank, NA v Burke, 125 AD3d at 767; US Bank N.A. v Faruque, 120 AD3d at 577).

The parties’ remaining contentions either are without merit or need not be reached in light of our determination.

Accordingly, the Supreme Court should have denied those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendant Brian Weiss, to strike the answer of that defendant, and to appoint a referee to compute the amount due to the plaintiff.

MASTRO, J.P., BALKIN, DICKERSON and ROMAN, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

SALON-

Bernie Sanders has long described himself as a democratic socialist and has found himself fending off mischaracterizations of his political ideology quite often on the campaign trail, so much so that he plans to hold a major address on Thursday explicitly detailing what it means to be a democratic socialist. Ahead of Sanders’ big speech, Rolling Stone is out with its new cover feature on his political revolution and as an interview with the candidate while he was on the campaign trail back in May reveals, the populist seems just as committed to major reform as ever — starting with Wall Street.

The Vermont senator told Rolling Stone’s Tim Dickinson that his first course of action upon entering the White House would be to go after the Wall Street executives responsible for the 2008 global financial collapse. Not one Wall Street executive has ever been held criminally liable for the rampant financial malfeasance that dove the world markets into a tailspin.

 [SALON]

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U.S. finally targeting individuals for toxic mortgage bonds?

HousingWire-

Following through on policy changes announced earlier this year that opened the door to individuals being held criminally responsible for corporate misconduct that helped cause the financial crisis, the Department of Justice is reportedly pursuing criminal charges against executives at the Royal Bank of Scotland (RBS) andJPMorgan Chase (JPM).

According to a report from the Wall Street Journal, federal investigators are working on establishing cases against the RBS and JPMorgan Chase executives for “allegedly selling flawed mortgage securities,” despite reportedly receiving warnings that they were securitizing too many potentially toxic mortgages.

[HOUSINGWIRE]

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

IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT

WELLS FARGO BANK, National
Association, as trustee for Structured
Asset Mortgage Investments II Inc.,
Bear Stearns Mortgage Funding Trust,
2007-AR1, Mortgage Pass-Through
Certificates, Series 2007-AR1,

Appellant,

v.                           Case No. 2D14-5116

LAURI MAILLOUX and MARC MAILLOUX,

Appellees.

Opinion filed October 30, 2015.

Appeal from the Circuit Court for Manatee
County; Thomas M. Gallen, Senior Judge.
Ronnie J. Bitman and Kristen M. Rickard of
Pearson Bitman LLP, Maitland, for
Appellant.
John P. Fleck, Jr., Bradenton, for
Appellees.

ALTENBERND, Judge.

Wells Fargo Bank appeals a final judgment awarding attorneys’ fees and
costs for the representation of Lauri and Marc Mailloux in a foreclosure proceeding.
Wells Fargo argues that the Maillouxes are not entitled to fees because their motion for
fees and costs was filed more than thirty days after the service of Wells Fargo’s notice
of voluntary dismissal, which was filed pursuant to Florida Rule of Civil Procedure
1.420(a)(1)(A). It also argues that the fee award is excessive. We affirm. We write
primarily to explain that Wells Fargo had no legal right to compel the trial court to begin
the thirty-day period for service of a timely motion for fees and costs with the service of
its notice of voluntary dismissal. See Fla. R. Civ. P. 1.525. This is true because the
notice was expressly conditioned on the Maillouxes first waiving their right to fees and
costs, which they did not do.

Wells Fargo filed this foreclosure action in June 2013. On June 5, 2014,
after the action had been pending for nearly a year, Wells Fargo filed and served a
document titled “Notice of Dismissal and Discharge of Lis Pendens.” In addition to the
standard language typically found in such a document, this notice of dismissal stated:
“This dismissal is expressly made conditional upon Plaintiff and the Defendants
agreeing to pay their own attorneys’ fees and costs.” It is undisputed that the
Maillouxes had not stipulated to waive their contractual right to attorneys’ fees prior to
the service of this notice and did not do so thereafter. Simply put, the parties never
reached a mutual agreement on this condition.

On June 16, 2014, the Maillouxes filed a motion for final dismissal, stating:
“The defendants Mailloux move this court to enter a final order for final dismissal
showing that this case is dismissed and closed.” The clerk of court accepted this filing,
and Wells Fargo filed nothing in response to this motion. The motion was heard by the
trial court on July 24. The court entered the requested dismissal order at that time.

Within thirty days of the filing of this order, the Maillouxes filed and served a “Motion for
an Award of Attorney’s Fees, Costs, Expenses.”

In the trial court, Wells Fargo argued essentially that its notice of voluntary
dismissal ended the case and that the court thus lost jurisdiction to consider the
Maillouxes’ rule 1.525 motion because it was filed more than thirty days after the service
of Wells Fargo’s notice of dismissal. The trial court rejected this argument, reasoning
that Wells Fargo’s notice was ineffective to commence the thirty-day period because the
notice was conditional. The court awarded fees and costs totaling $38,017.50.

On appeal, Wells Fargo argues that Tunison v. Bank of America, N.A.,
144 So. 3d 588, 592 (Fla. 2d DCA 2014), supports its position because in Tunison this
court concluded that the waiver of attorneys’ fees in a similar conditional voluntary
dismissal was “not binding” on the party dismissed. Wells Fargo reasons that, in
Tunison, we did not declare the notice of voluntary dismissal void or ineffective for the
purpose of dismissing the case, we merely held the condition to be unenforceable.

We conclude that Wells Fargo reads too much into the language in
Tunison. The motion for fees in that case was filed within thirty days of that notice.
Thus, unlike here, the timeliness of the motion was not an issue in Tunison.
Furthermore, whether the notice could be sufficient to serve as a voluntary dismissal
that permitted the clerk of court to close the file was not an issue resolved in Tunison
and is not an issue in this case.1 The only issue in this case is whether Wells Fargo,
having served this odd conditional document, has the right to treat its service as the
event commencing the thirty-day period for purposes of rule 1.525.

Prior to the adoption of rule 1.525, the “reasonable” time in which to file a
motion for costs and attorneys’ fees was difficult to predict and either side ultimately
could be prejudiced by this uncertainty. See, e.g., Scott D. Makar, Post-Judgment
Motions for Attorneys’ Fees: Time for a Bright-Line Rule, 71 Fla. B.J. 14 (Feb. 1997).
“Rule 1.525 was created to establish a bright-line rule to resolve the uncertainty
surrounding the timing of these posttrial motions.” Diaz v. Bowen, 832 So. 2d 200, 201
(Fla. 2d DCA 2002). But given the short period allowed for the filing of a motion for
costs and attorneys’ fees, an equal injustice would occur if the service of ambiguous
documents commenced the thirty-day period.

Wells Fargo added a condition to its notice that it knew had not been
fulfilled. Moreover, when, if ever, this condition would be fulfilled could not be
predicted.2 When the Maillouxes filed a motion to dismiss within the thirty-day period,
Wells Fargo took no step to clarify the situation. It did not file another standard notice of
voluntary dismissal without the conditional language even though it now maintains in
this appeal that the language was a scrivener’s error. We conclude that the trial court
was well within its discretion to decide that the service of the conditional dismissal did
not commence the thirty-day period because the effective date of the dismissal could
not be determined on the face of this public record and the facts demonstrated that the
parties never reached agreement on the condition.

As to the amount of fees, the experienced trial judge admittedly awarded a
generous fee. But the amount awarded was supported by competent, substantial
evidence, and we cannot conclude that the trial court abused its discretion in setting the
amount.

Affirmed.

NORTHCUTT and LaROSE, JJ., Concur.

footnotes:
1Unless all parties sign a stipulation of dismissal under rule 1.420(a)(1)(B),
it is difficult for the court, the clerk, or the public to know whether or when such a
condition precedent to dismissal is fulfilled.

2Under the somewhat different rules applicable to appeals, this court
rejects conditional notices of dismissal. See Hammerl v. State, 779 So. 2d 410 (Fla. 2d
DCA 2000).

From Bill Moyer’s 2004 interview with Elizabeth Warren

BERNIE|WARREN 2016

Image: Reuters Stephen Lam

Joseph D. Wargo and Susan Capote of Wargo & French, LLP, Miami, for Appellee.

BILBREY, J.

Appellants, the Seidlers, appeal the amended final judgment of foreclosure, which included the trial court’s finding of standing based on Wells Fargo Bank, N.A.’s reestablishment of a lost note. Because the record does not contain sufficient evidence to support reestablishment of the lost page of the note or to prove the original plaintiff’s standing to enforce the note at the time the foreclosure action was filed, the evidence is insufficient to support the amended final judgment, and we therefore reverse.

“The standard of this court’s review of the evidence to prove standing to bring a foreclosure action is de novo.” Ham v. Nationstar Mortg., LLC, 164 So. 3d 714, 717 (Fla. 1st DCA 2015); Pennington v. Ocwen Loan Servicing, LLC, 151 So. 3d 52, 53 (Fla. 1st DCA 2014). A finding that a lost note is reestablished, under section 673.3091, Florida Statutes, is reversible upon the appellate court’s determination of a failure of proof. See Correa v. U. S. Bank, N.A., 118 So. 3d 952 (Fla. 2d DCA 2013).

On December 16, 2008, plaintiff Wachovia Bank, N.A. filed its complaint to reestablish a lost promissory note, under section 673.3091, Florida Statutes, and for foreclosure on the mortgage securing that lost note. Wachovia alleged that it was “the owner” of the note, that the note was lost or destroyed at some unknown time after Wachovia acquired the note, and that Wachovia was entitled to enforce the note at the time it was lost. Wachovia also alleged that its loss of possession of the note was not the result of a transfer by Wachovia or a lawful seizure, and that Wachovia could not reasonably obtain possession of the instrument due to its loss or destruction. In its complaint, Wachovia agreed to indemnify the defendants if any other party attempted to enforce the lost note after Wachovia obtained a final judgment. Accordingly, the complaint alleged the statutory cause of action to reestablish a lost note under section 673.3091(1).

Section 673.3091(2), Florida Statutes, provides that “[a] person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person’s right to enforce the instrument.” As proof of the terms of the instrument, Wachovia attached copies of the note and mortgage to its complaint.

The copy of the attached note consisted of three pages. Page 1 was dated August 18, 2005, and provided that Jason P. Seidler borrowed $185,250.00 from lender Irwin Mortgage Corporation and agreed to repay that amount with interest, under the note’s terms. The last page of the copy of the note attached to the complaint, page 3, contained Mr. Seidler’s undated signature. No indorsement or other indication of negotiation of the note appeared on this copy of page 3 of the note. No additional pages were attached. See § 673.2011, 673.2051, Fla. Stat. (methods of transfer of instruments; to whom payable under various types of indorsements).

The copy of the mortgage attached to the complaint was also dated August 18, 2005, and also listed Irwin Mortgage Corporation as the lender. The mortgage listed both Mr. and Mrs. Seidler as the mortgagors and referenced the promissory note secured by the mortgage.

The Seidlers timely filed their answer to the complaint on December 31, 2008. They denied each of Wachovia’s allegations of ownership of the note, possession at the time the note was lost, and that Wachovia was entitled to enforce the lost note. Likewise, the Seidlers denied the material allegations of the foreclosure count, including Wachovia’s allegation of ownership of the note, and that all conditions precedent to the filing of the foreclosure action had been performed. Wachovia filed its motion for summary judgment on February 11, 2009, asserting that the note and mortgage entitled Wachovia to foreclose to enforce the note. The motion for hearing was set for April 27, 2009, and on that date, copies of the first two pages of the note and the entire mortgage were filed with the court. However, page 3 of the note was not included. No indorsement of the note or other indication of negotiation of the instrument was filed at this time. The court denied summary judgment and ordered the parties to attend mediation. Mediation did not result in any resolution of the action.

On February 6, 2013, the trial court granted Wachovia’s motion to substitute Wells Fargo as the plaintiff based upon Wachovia’s merger with Wells Fargo. Standing was still at issue because, as frequently observed, “[o]nce a defendant contests the plaintiff’s standing as the proper party to enforce a note via foreclosure, the plaintiff’s right to bring suit on the note at the requisite time becomes a disputed issue the plaintiff must prove.” Ham, 164 So. 3d at 719 n.1; see also Gee v. U. S. Bank N.A., 72 So. 3d 211, 213-14 (Fla. 5th DCA 2011). After Wells Fargo was substituted as the plaintiff, the Seidlers directed their challenges to standing to foreclose towards Wells Fargo’s proof of entitlement to enforce the note. The Seidlers denied Wells Fargo’s proof of ownership and right to enforce the note via foreclosure of the mortgage in their motion for summary judgment, filed June 28, 2013, and in their motion for judgment on the pleadings, filed December 27, 2013. The trial court did not rule on the Seidlers’ motions or make any rulings regarding Wells Fargo’s standing prior to trial.

The bench trial took place on April 2, 2014. “A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.” McLean v. JP Morgan Chase Bank, N.A., 79 So. 3d 170 (Fla. 4th DCA 2012). Where the plaintiff is not the party to whom the note is payable by its terms, and where the plaintiff at trial is not the original plaintiff, the plaintiff is required to prove not only its standing on the date of trial, but also that the original plaintiff was entitled to enforce the note on the date the initial complaint was filed. SeeKiefert v. Nationstar Mortgage, LLC, 153 So. 3d 351, 352 (Fla. 1st DCA 2014). If standing is claimed on the basis of indorsement of the note from the original named payee, the plaintiff must establish that the note was indorsed “before the filing of the complaint in order to prove its standing as a holder.” Id. A plaintiff in a foreclosure “must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012).

The record in this case as of the date of the final hearing established that the note was payable to Irwin Mortgage. Because the Seidlers had consistently denied Wachovia’s, and then Wells Fargo’s, standing to enforce the note via the foreclosure action, Wells Fargo was required to prove not only its own entitlement to enforce the note on the date of trial, under any of the provisions of section 673.3011, Florida Statutes, but also that Wachovia was entitled to enforce the note on the date the complaint was filed.

As stated in Ham v. Nationstar Mortgage, LLC, “[t]he law is firmly settled that `[a] plaintiff who is not the original lender may establish standing to foreclose by submitting a note with a blank or special indorsement, an assignment of the note, or an affidavit otherwise proving his status as a holder of the note.'” Ham, 164 So. 3d at 717 (citations omitted). At the time Wachovia filed its complaint in 2008, no such document was attached to the complaint or affixed to the copy of the note. See Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308 (Fla. 2d DCA 2013).^[1]

Wells Fargo’s Exhibit 1 at trial was a copy of the note which, unlike the copy of the note attached to the complaint, included an indorsement in blank on the final page. See Farkas v. U.S. Bank, N.A., 165 So. 3d 796 (Fla. 4th DCA 2015) (judgment reversed due to lack of proof of standing; unindorsed note attached to complaint differed from indorsed note presented at trial). The indorsement was dated August 18, 2006, over two years prior to the filing of the complaint. Such indorsement in blank made the note “payable to bearer” and negotiable “by transfer of possession alone until specially indorsed.” § 673.2051(2), Fla. Stat.

The trial court admitted Exhibit 1 into evidence over the Seidlers’ objections that it was not authentic, as was within the trial court’s discretion.^[2] This exhibit constituted evidence to support a finding that on August 18, 2006, the note became payable to the bearer and thus enforceable via possession alone. Wachovia’s standing, as a holder under section 673.3011(1), Florida Statutes, could thus have been proved upon a showing that Wachovia possessed the note, as indorsed, on December 16, 2008, when the complaint was filed. However, Wachovia specifically alleged that it did not possess the note and was seeking to reestablish a lost note, under section 673.3091. Section 673.3091 applies to persons “not in possession of an instrument,” and Wachovia’s allegations in the complaint preclude a finding that Wachovia had standing as a holder on the date the complaint was filed by virtue of its possession of the note indorsed in blank.^[3]

Wells Fargo thus proceeded under sections 673.3011(3) and 673.391 to enforce the note through foreclosure. The only evidence Wells Fargo presented to support Wachovia’s lost note allegations was the testimony of Darrell Dewhurst, Home Equity Research Officer for J.P. Morgan Chase Bank, N.A. Mr. Dewhurst testified that his employer, J.P. Morgan Chase, was the current servicer on the mortgage and now possessed and held the note.^[4] He unequivocally stated that J.P. Morgan Chase possessed the originals of the first two pages of the note in its business records and its “I-vault system,” but that the original page 3 was lost. Mr. Dewhurst agreed with Wells Fargo’s counsel’s questions pertaining to a lost note under section 673.3091 as follows:

Q: And was the plaintiff in possession of the note — the third page of the note prior to the filing of this foreclosure action?

A: Yes.

Q: At that time, that the plaintiff had possession of the note, did they have the authority to enforce the note and mortgage?

A: Yes.

Q: Has the note — have the note and mortgage or the rights under the mortgage been transferred to any other entity?

A: No.

Q: And has the plaintiff attempted to search for the original documents:

A: Yes.

Q: And were they unable to locate the same?

A: Yes.

Q: Does the plaintiff agree to indemnify the defendants from the claims by improper third parties asserting rights under the lost note based upon possession of the original?

A: Yes.

It was unclear from Mr. Dewhurst’s answers which plaintiff he meant, Wachovia, in 2008, or the current plaintiff, Wells Fargo. J.P. Morgan Chase was never a party to this action.

On cross examination, when Mr. Seidler asked if Mr. Dewhurst knew when “Wells Fargo” obtained possession of the note, Mr. Dewhurst stated that he did not know. Mr. Dewhurst also did not know if the copy of the note attached to the complaint was the same as the note presented at trial.

The evidence presented by Wells Fargo at trial was insufficient to meet its burden for reestablishing the lost page 3 of the note at issue, and thus insufficient to prove Wachovia’s standing to enforce the lost note on the date the complaint was filed. SeeGuerrero v. Chase Home Finance, LLC, 83 So. 3d 970 (Fla. 3d DCA 2012)(testimony of employee of current servicer of mortgage and of records custodian of plaintiff’s counsel’s office insufficient proof to reestablish lost note; final judgment of foreclosure reversed and remanded). Wells Fargo needed to prove Wachovia was entitled to enforce the note when possession was lost. § 673.3091(1)(a), Fla. Stat. Mr. Dewhurst never mentioned Wachovia at any point in his testimony. He gave no indication that he had any knowledge of events which took place in 2008 or before, and no basis for his “yes” and “no” responses to counsel’s inquiries about “the plaintiff’s” possession, loss, and search for the note on or before the date Wachovia’s complaint was filed in 2008. Mr. Dewhurst did not testify about any work history or relationship he might have had with any company other than J.P. Morgan Chase. The bare affirmations by Wells Fargo’s only witness were insufficient to prove Wachovia’s, and thus Wells Fargo’s, entitlement to reestablish a lost note and then enforce that note under sections 673.3011 and 673.3091. See Correa v. U. S. Bank, N.A., 118 So. 3d 952 (Fla. 2d DCA 2013) (testimony of employee of mortgage servicer insufficient to prove circumstances of loss of note); Shores v. First Florida Resource Corp., 267 So. 2d 696 (Fla. 2d DCA 1972) (bare affirmation of corporate officers insufficient to establish transfer of instruments or lack thereof).

Because Wells Fargo failed to prove its claim to reestablish a lost note and failed to prove its standing, based on the original plaintiff’s standing to foreclose on the mortgage securing that note on the date the complaint was filed, the final judgment of foreclosure and the amended final judgment of foreclosure are

REVERSED.

BENTON and OSTERHAUS, JJ., CONCUR.

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

[1] Although not dispositive, at trial the Seidlers admitted into evidence an assignment of mortgage from Irwin Mortgage (via the nominee for Irwin— Mortgage Electronic Registration Systems, or MERS) which provided that the mortgage, “together with the note,” was assigned to Wachovia on January 6, 2009.

[2] “A trial court’s ruling on the admissibility of evidence under the business records hearsay exception is reviewed for an abuse of discretion.” Peuguero v. Bank of Am., N.A., 169 So. 3d 1198, 1202 (Fla. 4th DCA 2015); see also Cayea v. CitiMortgage, Inc., 138 So. 3d 1214 (Fla. 4th DCA 2014).

[3] Likewise, Wachovia could not have been entitled to enforce the note under section 673.3011(2) as “a non-holder in possession of the instrument who has the rights of a holder,” because the complaint specifically alleged that Wachovia was not in possession of the note.

[4] While Wells Fargo succeeded Wachovia Bank, N.A. as the plaintiff in this action due to its showing of a merger, J.P. Morgan Chase is not and never was a party to this action.

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT

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

PATRICK HICKS AND
TAMAICA HICKS,
Appellants,

v. Case No. 5D14-1748

WELLS FARGO BANK, N.A.,
ETC., ET AL.,
Appellees.
________________________________/

Opinion filed November 13, 2015
Appeal from the Circuit Court
for Orange County,

Lawrence R. Kirkwood, Senior Judge.
Lora S. Scott, of The Law Office of Lora S.
Scott, LLC, Orlando, for Appellants.
Michael K. Winston and Dean A. Morande,
of Carlton Fields Jorden Burt, P.A., West
Palm Beach, for Appellee.

LAMBERT, J.
Patrick Hicks and Tamaica Hicks (“Homeowners”) appeal the final judgment of
foreclosure entered in favor of Wells Fargo Bank, N.A. (“Bank”). Homeowners argue that
based upon the default date alleged in the complaint and the stipulations of the parties at
trial, Bank’s claim was barred by the applicable statute of limitations. We agree and
reverse with directions to dismiss the complaint.

On January 9, 2013, Bank filed its complaint to foreclose the mortgage and
reestablish the promissory note at issue.1 Bank alleged that the terms of the note and
mortgage had been breached by Homeowners’ failure to pay the June 1, 2006 payment
and all subsequent payments. Bank also alleged that it exercised its option to accelerate
the loan.

Homeowners answered the complaint and asserted as their first affirmative
defense that the complaint was time barred and must be dismissed with prejudice
because the suit was not commenced within five years of the default date alleged in the
complaint, as required under section 95.11(2)(c), Florida Statutes (2013) (establishing a
five-year statute of limitations on actions to foreclose a mortgage). Bank did not file a
reply to the affirmative defense.

The case proceeded to trial in March 2014. At the commencement of trial, the
following colloquy between counsel and the court occurred:

[HOMEOWNERS’ COUNSEL]: Your Honor, before we get
started with testimony, plaintiff’s counsel and I have talked.
We actually believe that none of the facts are in dispute, and
it’s just a matter of law that the Court needs to rule upon.
There was a motion for summary judgment filed, but
unfortunately it was filed 18 days ago. So by rule, we aren’t
able to have it heard before today’s trial.
So we are proposing that we have a stipulation to the facts
during what is now the trial, and then make arguments to the
Court in terms of the law and how those facts should be
applied, and then have the Court render a judgment based on
those facts and application of the law.

[BANK’S COUNSEL]: Your Honor, that’s the agreement. And
I believe that the agreement is that, depending on how this
comes out, they’ll consent to the final judgment or it will be
dismissed.

THE COURT: This is set for trial. It’s not set for summary
judgment.

[HOMEOWNERS’ COUNSEL]: That’s correct, Your Honor,
but being that there are no disputes as to the facts, we’d be
happy to stipulate to what those are for the Court to consider.

[BANK’S COUNSEL]: And really, I mean, the determining
factor isn’t anything to do with the facts. It’s one issue of law.
. . . .

[BANK’S COUNSEL]: . . . . There was a default on the loan
that occurred in 2006. The prior holder of the note, US Bank,
filed a foreclosure action against defendants in 2006. That
action was voluntarily dismissed in 2008.

In 2011, Wells Fargo, who is the current holder of the note and
mortgage, sent a notice of intent to accelerate to the
defendants, and then filed a new foreclosure action in 2013.[2]

Homeowners’ counsel thereafter argued that it was undisputed that there was a
prior foreclosure suit, based on a June 1, 2006 default, filed on September 8, 2006, and
that by filing the 2006 foreclosure action, the prior holder accelerated the balance owed
on the note. Subsequently, the suit was voluntarily dismissed without prejudice. Based
on this chronology, Homeowners’ counsel asserted below that Bank was therefore
required to file the present suit to foreclose no later than September 8, 2011. Because
the present suit was not filed until 2013, Homeowners argued that Bank’s suit was barred
by the statute of limitations. Conversely, Bank argued that pursuant to Singleton v.
Greymar Associates, 882 So. 2d 1004 (Fla. 2004), the voluntary dismissal of the prior
foreclosure action in 2008, without prejudice, meant that the loan was no longer in a state
of acceleration. Therefore, Bank asserted that if the loan went into “default at any time,”
Bank would be entitled to accelerate the full balance due under the note, including “the
amounts going back to the first date of default because that’s what’s due and owing.”
After listening to the arguments, the court entered the final judgment of foreclosure on
appeal.

The dispositive facts in this appeal are not in dispute. Because the earlier voluntary
dismissal was not an adjudication on the merits, Evergrene Partners, Inc. v. CitiBank,
N.A., 143 So. 3d 954, 956 (Fla. 4th DCA 2014) (citing Froman v. Kirland, 753 So. 2d 114,
116 (Fla. 4th DCA 1999)), Bank was entitled to bring a later suit to foreclose on the note
and mortgage. However, the suit must still be based on an act of default within the fiveyear
statute of limitations period. See id. Here, Bank’s complaint was filed in 2013, based
on an alleged default occurring on June 1, 2006.3 Because trial counsel for the parties
stipulated to the court that the facts were undisputed, with Bank’s counsel additionally
confirming that the sole determinative issue to resolve at trial was one of law, the court
erred when it failed to dismiss the foreclosure complaint with prejudice based on a default
that occurred outside of the five-year statute of limitations period.

Nevertheless, we reject Homeowners’ implication in their brief that Bank is now
forever barred from bringing an action to foreclose. Despite the previous acceleration of
the balance owed in both the instant suit and prior suit, Bank is not precluded from filing
a new foreclosure action based on different acts or dates of default not previously alleged,
provided that the subsequent foreclosure action on the subsequent defaults is brought
within the statute of limitations period found in section 95.11(2)(c), Florida Statutes. See
Singleton, 882 So. 2d at 1007 (“While it is true that a foreclosure action and an
acceleration of the balance due based upon the same default may bar a subsequent
action on that default, an acceleration and foreclosure predicated upon subsequent and
different defaults present a separate and distinct issue.”) (citing Olympia Mortg. Corp. v.
Pugh, 774 So. 2d 863, 866 (Fla. 4th DCA 2000))). This is because a “subsequent and
separate alleged default create[s] a new and independent right in the mortgagee to
accelerate payment on the note in a subsequent foreclosure action.” Id. at 1008; U.S.
Bank, Nat’l Ass’n v. Bartram, 140 So. 3d 1007, 1014 (Fla. 5th DCA) (recognizing that the
discussion in Singleton was limited to the application of the res judicata doctrine, but
concluding that Singleton’s analysis is equally applicable to the statute of limitations
issue), review granted, 160 So. 3d 892 (Fla. 2014); see also Wells Fargo Bank, N.A. v.
Robinson, 168 So. 3d 1279, 1280 (Fla. 5th DCA 2015); PNC Bank, N.A. v. Neal, 147 So.
3d 32 (Fla. 1st DCA 2013); Star Funding Sols., LLC v. Krondes, 101 So. 3d 403 (Fla. 4th
DCA 2012).

REVERSED and REMANDED with directions to dismiss the complaint.

TORPY and COHEN, JJ., concur

footnotes:
1 The note being sued on is dated September 19, 2005, with a maturity date of
October 1, 2035.

2 In light of these representations made to the lower court, we find Bank’s argument
on appeal—that Homeowners failed to meet their evidentiary burden of proof on their
affirmative defense or somehow “invited error”—to be particularly meritless. We further
note that Bank’s trial counsel is not Bank’s appellate counsel.

3 This was further evidenced by the language in the final judgment that was
prepared by Bank’s trial counsel.

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