Justice Prevails for Another Florida Homeowner

This was a mortgage foreclosure case and our defense hinged on improper force-placed insurance. After suit was filed, I issued subpoenas and gathered self-authenticating business record affidavits from my clients’ insurance company and bank to show that they always had adequate insurance coverage, and that their timely, full mortgage payments were being rejected for over a year. The plaintiff/bank voluntarily dismissed about a month after being served with those records but then they sought to deny my clients’ right to be indemnified for attorneys’ fees—claiming the bank was never the right party to file suit in the first place (even though they filed the suit under penalty of perjury stating that they were the right party).

The trial court agreed with the bank’s position and denied entitlement. We appealed and the case was pending on appeal for over four years. During that time, the appellate court requested supplemental briefings after the Florida Supreme Court issued opinions in two critical cases: Glass v. Nationstar Mortgage, LLC, 268 So. 3d 676 (Fla. 2019) (initially granting fees to a borrower but later withdrawn due to jurisdictional issues); and Page v. Deutsche Bank Tr. Co. Americas, 308 So. 3d 953 (Fla. 2020). Page was part of the reason the appellate court held our appeal in abeyance for approximately one year. Ultimately, the appellate court reversed the order denying entitlement and awarded my clients their fees. Thankfully, we also resolved the underlying matter.

Background

The complaint in this case alleged that my clients had defaulted three years before suit was filed. The original lender had a very similar name to the plaintiff. For several reasons, I removed the parties’ full names throughout this post but plaintiff was XXX Bank, and the original lender was XXX Mortgage.

The subject loan was a home equity line of credit (“HELOC”). It is “non-negotiable” as it is not for a fixed amount of money. § 673.1041, Fla. Stat. (2021) (“[T]he term ‘negotiable instrument’ means an unconditional promise or order to pay a fixed amount of money. . . .”) (Emphasis added.)

Unlike negotiable instruments, non-negotiable notes are not enforced based on proof of possession of a blank or specifically indorsed document. But the right to enforce a non-negotiable instrument is assignable. Chuchian v. Situs Investments, LLC, 219 So. 3d 992, 993 (Fla. 5th DCA 2017) (“The assignee of a nonnegotiable note obtains the right of the assignor to enforce the note and is subject to any defenses the borrower had against the assignor.”). This is because “[g]enerally, all contractual rights are assignable unless the contract prohibits assignment, the contract involves obligations of a personal nature, or public policy dictates against assignment.” L.V. McClendon Kennels, Inc. v. Inv. Corp. of S. Florida, 490 So. 2d 1374, 1375 (Fla. 3d DCA 1986).

None of the exceptions to assignability applied in this case and the bank attached an assignment of mortgage (“AOM”) to the complaint. The AOM referenced the Mortgage “with all moneys now owing or that may hereafter become due or owing.” And section 701.01, Florida Statutes, states:

Any mortgagee may assign and transfer any mortgage made to her or him, and the person to whom any mortgage may be assigned or transferred may also assign and transfer it, and that person or her or his assigns or subsequent assignees may lawfully have, take and pursue the same means and remedies which the mortgagee may lawfully have, take or pursue for the foreclosure of a mortgage and for the recovery of the money secured thereby.

(Emphasis added.)

I pleaded lack of standing at the outset to best serve my clients and preserve all possible winnable issues, but I was fairly certain the bank would be able to establish a pre-suit assignment from XXX Mortgage to XXX Bank. They are obviously related entities. Standing was not a primary issue.

Rather, the critical issue was force-placed insurance. My clients maintained they had tendered over a year’s worth of timely, full payments. But the bank and its servicers/agents rejected those because my clients refused to pay for improperly force-placed insurance. At all times, they had adequate insurance in place. My clients also insisted that at some point their bank refused to send payments to the plaintiff/bank because the payments were being rejected for such a long time. Importantly, my clients assured me that, at all times, they had the money to pay their relatively small home loan. (According to the plaintiff/bank, the unpaid principal balance was just over $60,000.)

But I have had clients tell me similar things before and their “side of the story” does not always bear out. I was also concerned that their mortgage contained provisions that allow lenders to reject partial payments (as many do) and that my clients might have been sending in partial payments—that could have been lawfully rejected. Moreover, I know from experience that it is very difficult to convince a judge that an alleged defaulted borrower—who admittedly had not tendered a payment in a few years—should still prevail. That is a tough argument no matter what. I had a lot of work to do to determine if my clients’ claims were true, if I could prove them, and if they would carry the day.

We initially filed a motion for enlargement of time to respond to the complaint and the bank’s request for admissions. We did not wait for an order but instead, promptly filed a Motion to Quash (“MTQ”).

Around the same time a hearing on the MTQ was being set, I relayed an offer to the bank’s lawyer over the phone and by email. My clients agreed to pay $50,000 to satisfy the alleged approximately $60,000 unpaid principal balance, with both sides bearing their own fees and costs. But like other settlement proposals throughout this case, the bank and its lawyers never countered or even responded.

We ultimately agreed to an order on our MTQ and filed an answer, including two affirmative defenses on unclean hands. Those defenses were based on what the clients were telling me and on some documents/correspondence they had provided. One of the documents was a “misapplication reversal” check and cover letter advising that the account was “overpaid.” The bank sent that to my clients after the date of default alleged in the complaint.

We continued to do what was needed to gather our clients’ bank and insurance records (in admissible form) to establish that their payments were wrongfully rejected due to the bank’s improper/unnecessary force-placed insurance.

Despite our efforts to coordinate depositions, opposing counsel was uncooperative. We eventually issued and served subpoenas on our clients’ insurance carrier and personal bank, and filed and served deposition notices.

After Plaintiff initially sought and obtained more time, it finally responded to our request for admissions, request for production, and interrogatories. But their responses were evasive. So after trying to resolve the discovery issues, and again not receiving a response, we filed a motion to compel.

Plaintiff noticed the action for trial and filed a motion for protective order—seeking to stop us from deposing our clients’ bank representative. Plaintiff complained that the deposition was set within a week of being noticed. But the clerk of court’s filing stamp (and certificate of service) for the deposition notice showed that the deposition was set with thirty-days advance notice. Plaintiff also claimed that the deposition was not coordinated. But it failed to mention that while its counsel’s office responded to our email attempting to coordinate, it did not respond to our specific request for them to pick one of multiple proposed dates. Plaintiff’s counsel’s office also emailed they were “unable to coordinate” a date for our client’s insurance company’s deposition. Further, the motion for protective order claimed that our defenses were boilerplate and that my clients had no defense to non-payment or the plaintiff being a “holder in due course.”

A couple of weeks later, I had a phone call with the bank lawyer who signed the bank’s motion for protective order. He could not understand why we were taking depositions. I was hesitant to disclose this, but I explained that the issues are pleaded in the affirmative defenses and asked if he had reviewed those. He did not respond to my question, and it was clear that he was unaware of my client’s contentions. (This was also previously made clear by the numerous incorrect statements in his motion for protective order.) I summarized the text of the unclean hands defenses for him and explained that we were in the process of gathering evidence to prove that the bank improperly force-placed insurance and rejected over a years’ worth of payments—as pleaded. My clients also denied being in default in their answer. But for the bank and its servicer, the loan would be current and there would be no suit. I recall telling the other attorney that the bank even sent a refund check for overpayment, and that it was dated after the alleged date of default. (That correspondence was also attached to our pleadings.) He thanked me and we ended the call.

Just before the depositions, my clients’ insurance company and bank agreed to give us self-authenticating business record certifications/affidavits. We promptly canceled the depositions and served the certifications on plaintiff’s counsel. We provided the bank with 1,014 pages of self-authenticating business records that proved my clients had insurance at all times, and that their payments were being timely made, and rejected.

As part of this process, we found out that my clients’ bank was using a third-party to process certain payment-related messages to their customers. We began taking steps to subpoena and depose that company too as we had copies of electronic bank messages showing that the plaintiff/bank was rejecting automatic payments.

On the day before a hearing on our motion to compel better answers to discovery, I spoke to the same bank lawyer I had spoken to about the motion for protective order. He refused to come to any agreement. But the next morning, just before the hearing and while standing in the hallway outside the judge’s chambers, he agreed to an order giving us what we would have agreed to all along.

We finished drafting our subpoena to the third-party message processor for our clients’ bank and were about to proceed when, to our surprise, the Plaintiff voluntarily dismissed the case.

We prepared and filed our fee motion. A week later, plaintiff’s counsel asked me for my time records and a settlement proposal. I sent that over. The bank and its lawyers never responded. Instead, about two weeks after I sent the settlement proposal, I received an email from opposing counsel. They were requesting a special set hearing on entitlement.

We began preparing for that contested hearing. The bank pleaded—under penalty of perjury in the complaint—that it was entitled to enforce the loan documents. For example, paragraph eleven in complaint states: “Plaintiff is entitled to recover its attorneys’ fees under the parties’ agreement.” (Emphasis added.) But to deny my client entitlement to fees, the bank claimed (and its counsels argued at the entitlement hearing and throughout the appeal), that the bank was not entitled to enforce, because there was no contract between the parties. And if there is no contract between the parties, my clients cannot recover fees under a statute that presupposes a contractual relationship exists. See § 57.105(7), Fla. Stat. (2022).

As a bank lawyer stated at the entitlement hearing: “[W]e don’t have parties to the suit who are also parties to the contract. . . So that’s like a non-party coming in and trying to get fees under a contract, right? That’s like my sister coming in, or your brother trying to come in and get fees . . . .”

As part of that hearing preparation, I filed a memorandum and a request to take judicial notice of a certified copy of the Complaint, Mortgage, and AOM. Plaintiff filed its own memorandum.

At the hearing, and without objection from the bank lawyer, the court took judicial notice of the requested documents. It was my position from the beginning that the AOM connected the parties to the Mortgage, the Mortgage contained the applicable fee provision needed for reciprocity under 57.105(7), and there was no dispute that we prevailed. Despite my argument and evidence, the trial court judge relied on what is now quashed case law and rejected reasoning to deny fees.

We ordered the transcript and soon found out that the reporter made a lot of mistakes. Thankfully, we also had an audio file. But working with the court reporter and opposing counsel to get the transcript right took a significant amount of time. Once finalized, we filed the transcript, along with a notice of appeal.

We worked diligently to draft the initial brief but still needed two extensions. New case law on fees was coming out almost weekly and that caused us to have to revisit and edit the brief many times. We supplemented the record and filed a request to take judicial notice. The bank also supplemented the record.

Just before we filed our initial brief, the bank filed a new lawsuit based on the same documents, the same alleged default date, and between the same parties. In that suit, the bank again stated—under penalty of perjury—that “Plaintiff is entitled to recover its attorneys’ fees under the parties’ agreement.” (Emphasis added.) So for approximately four years, the bank and its lawyers were simultaneously taking the position that there was no contractual relationship in one case, while claiming there was a contractual relationship in another—to avoid paying my clients their fees, while still trying to foreclose on their home. (The only difference between the two cases was that the HELOC in the second case purported to bear a specific indorsement that was not apparently on the HELOC in the first case.)

Plaintiff and their lawyers’ inconsistency was apparently knowingly dishonest. And they were taking these contrary positions just to try to save an extremely profitable bank a relatively small amount of money. Even though the basis of the appeal centered around fees and costs, due to the bank’s posturing and the evidence that now showed that the bank really did reject payments and improperly force-place insurance, this case was an excellent cause to provide service and seek justice.

The bank sought two extensions to file their answer brief. And we eventually filed our reply, appellate fee motion, request for oral argument, and second request for judicial notice.

The bank objected to our request for appellate fees and also requested their own judicial notice. Due to several misstatements in their judicial notice request, we objected and moved to strike. They eventually responded and the court denied our motion without addressing the merits.

In early January 2019, the Florida Supreme Court issued an opinion in Glass and our appellate court ordered both sides to brief the case. After those briefs were submitted, the Florida Supreme Court withdrew Glass as jurisdiction had been improvidently granted.

A few months later, the appellate court in our case issued a per curiam affirmance of the trial court’s denial of entitlement. It also denied our appellate fee motion. I took the night off and began working on the motion for rehearing early the next day. I recall working on it nearly every day for fourteen days straight. Without seeking an extension, we timely filed a Motion for Rehearing En Banc, Motion for Rehearing, or in the Alternative, Motion for Written Opinion. The other side sought and obtained an extension, and then filed a response. Two months later, the appellate court issued an order holding the case in abeyance pending the outcome of three other cases pending before the Florida Supreme Court.

Then, over a year and a half after we filed our motions for rehearing or written opinion, the Florida Supreme Court issued its Page decision. Eight months later, the appellate court in our case ordered us to brief it. The bank sought and obtained more time, and a longer page limit for the briefs. We opposed the page limit extension. The bank eventually filed their supplemental brief, and we filed ours.

Finally, in 2022, the appellate court granted our motion for rehearing, reversed the order denying entitlement to trial level fees and costs, and awarded us appellate fees.

Plaintiff and its counsels took litigious, and at times disingenuous positions during this case. Here are some examples:

• In its answer brief:
  • To try to argue that my clients waived their main argument on appeal, the bank stated that my clients did not seek fees under the mortgage at the trial level. That could have destroyed our case, if it were true. But section one of our trial-level Memorandum of Law on Attorneys’ Fees states: “The Mortgage, Assignment of Mortgage, and Florida Statute 57.105(7) authorize Defendants’ recovery of attorneys’ fees” and the body of that section explains this. During the entitlement hearing, the trial judge reiterated our position: “So what you’re saying is, Judge, we are a party to the mortgage. We can rely on 57.105, Sub. 7 because we are a party to the mortgage. . . .”
  • Plaintiff stated “the plain terms of [section 57.105(7)], require[] [my clients] also establish that XXX Bank was a party to the loan documents by establishing XXX Bank’s standing.” (Emphasis added.) Even without the parties’ names, the section’s “plain terms” do not state that.
  • Plaintiff claimed our discovery “focused specifically on their standing defenses.” But the truth is we propounded fifteen interrogatories (six of which pertain to standing), twenty-two requests for admissions (fourteen of which pertain to standing), and twenty-five requests for production (five of which addressed standing).
• In the bank’s supplemental brief addressing Page, plaintiff stated:
  • In Page v. Deutsche Bank Tr. Co., 308 So. 3d 953 (Fla. 2020), the Florida Supreme Court, treating a note and mortgage as one contract, confirmed prevailing borrowers seeking fees under § 57.105(7) have the burden to show through competent, substantial evidence that their opposing party from whom they seek fees had standing to enforce the note and mortgage at some point in the proceedings.

The Page opinion does not state that. It does not even use the word “substantial,” and it only uses the word “competent” in one unrelated provision pertaining to statutory interpretation. Id. at 958. Plaintiff repeated this false statement of law in its brief.

• In 2021, I attended a hearing in the second case with one of the bank lawyers who handled both cases. At that hearing, in an attempt to refute a possible estoppel argument (had the bank prevailed on appeal), the bank lawyer stated that the two cases did not pertain to the same note. This would be a critical factual distinction, if it were true. I refuted the comment and accused the bank lawyer of making a false statement of fact. He did not immediately respond or offer an apology, but instead only later in the proceeding offered an explanation about the indorsements being different. In a follow up email to the same bank lawyer, I wrote: “And in court the other day, you easily and apparently without the need to immediately correct yourself, informed the court that the two [ ] cases did not pertain to the same promissory note. That was a material misstatement of fact.” The bank lawyer responded, but only to acknowledge receipt. He never denied this.
• About two weeks before the appellate opinion was issued, the same bank lawyer emailed me as part of plaintiff’s only settlement proposal: “If the court reverses itself and allows you to proceed, the parties will be in for a long drawn-out attorney’s fee battle, one which you can be sure [XXX] Bank will fight in the trial court and then on appeal if the facts warrant.”
• And of course, plaintiff’s argument to deny entitlement was litigious and disingenuous from day one. Despite claiming otherwise throughout this case, plaintiff knew there was a contract between the parties.

My clients offered to pay the bank $50,000 to settle early in the case. But the bank and its lawyers never responded. After the suit was voluntarily dismissed, we again proposed settlement. But again, the Bank did not respond. The bank litigated this case for approximately six years—trying to wrongfully foreclose on my client’s home while taking outrageous positions to deny paying fees that it rightfully owed. Had it been reasonable, and had my clients and I had our way, this case would have been resolved years ago—with the bank receiving money from my clients and not paying our side for fees or costs (or anything else).

This case was always about much more than money to me. Still, money is important and I devoted a significant portion of the last several years of my life to serving these clients. While it was much harder and took much longer than I would have liked, justice ultimately prevailed. And I’m so grateful it did!

If you or someone you know needs help with real estate closings, foreclosure defense, consumer protection, personal injury, probate or estate planning, please contact us. Let the Law Offices of Evan M. Rosen, P.A. serve you!