FLORIDA CASE LAW UPDATES
WELLS FARGO BANK V. DIAS, 2D19-3256 (Fla. 2nd DCA Feb. 12, 2021).
The Court held a party who purchased the property at a homeowners association lien foreclosure sale during the pendency of a senior lien mortgage foreclosure action had no standing to raise the mortgagor’s forgery defense at trial in the foreclosure action (the mortgagor did not participate at the trial). There is a presumption that the mortgagor’s signature on the note and mortgage is authentic. The Court also rejected the third-party purchaser’s argument that the lender was required to prove the mortgagors’ continued marriage (the property was held by the mortgagors as tenants by the entireties) to prevail against them on its foreclosure claim.
FLORIDA CASE LAW UPDATES
U.S. BANK TRUST, N.A. V. DICK, 2D19-3998 (Fla. 2nd DCA Feb. 5, 2021).
The Court held the assignments of the note and mortgage introduced by the substituted plaintiff at trial were sufficient to warrant denial of defendant's motion for involuntary dismissal for lack of standing, notwithstanding defendant's assertion that the most recent assignment to the plaintiff was invalid if not fraudulent. In moving for involuntary dismissal, the borrowers were required to admit as true all of the facts in evidence, including the representations made in the assignments and every reasonable conclusion or inference that could be drawn from them favorable to the lender. Further, the plaintiff introduced the original note into evidence at trial, which established plaintiff’s standing to enforce it.
MINNESOTA CASE LAW UPDATE
Stuckey v. Gislason & Hunter LLP (D. Minn. 2021)
The US District Court in Minnesota issued a favorable order for creditors on January 12, 2021 in Stuckey v. Gislason & Hunter LLP. Facts of the case include, plaintiff’s as mortgagors and foreclosing Law Firm as a defendant. Law Firm sent out a letter with a Notice of Default and a pre-foreclosure notice to Plaintiff’s.
Plaintiff’s alleged that the Law Firm violated the FDCPA (15 U.S.C. § 1692 et seq.). Law Firm moved to dismiss for failure to state a claim under Rule 12(b)(6), arguing it is not a debt collector and therefore not subject to the FDCPA. Additional, Law Firm contends Plaintiff’s did not plead sufficient facts to establish it is a debt collector under the limited purpose definition in 15 U.S.C. § 1692(f)(6). The court threw out the argument that Law Firm was a debt collector, relying on the recent Obduskey precedent, “those who engage in only nonjudicial foreclosure proceedings are not debt collectors within the meaning of the Act”.
Plaintiff’s claims include, Law Firm attempted to collect more than the secured-claim amount owed, sent pre-foreclosure notices directly to plaintiffs represented by counsel, and notifying a foreclosure-prevention agency of the debt. The first claim was thrown out for failing to plead sufficient facts to state a claim, and plaintiff’s amended complaint listed the secured claim amount exactly as in the notice. The second claim was thrown out because Plaintiff failed to cite any post-Obduskey authority that Law Firm was acting as a primary-purpose debt collection, and that the notice was sent pursuant to state statutory requirements with counsel being copied. The final claim was also thrown out because Plaintiff’s failed to establish Law Firm was a primary purpose debt collector, and sent the homeowners name, address and phone number to foreclosure prevention agencies as required by state statute.
Ultimately, the court found that the Law Firm commencing non-judicial foreclosures was not a debt collector under the primary purpose of the FDCPA. Even if a debt collector for the limited purposes of 15 U.S.C. § 1692(f)(6), complying with state statutes do not amount to FDCPA violations.
FLORIDA CASE LAW UPDATES
MTGLQ INVESTORS, L.P. V. MERRILL, 1D19-2682 (Fla. 1st DCA Jan. 25, 2021)
Merrill, the borrower, gave her lender a purchase-money mortgage and note in June 2007. In 2013, JPMorgan Chase Bank (“Chase”) filed a foreclosure action alleging that Fannie Mae owned the note, and that Chase was authorized to bring the action. Chase filed the original note and mortgage in 2013. The original note had an allonge with a blank endorsement. In 2014, Chase moved to substitute Fannie Mae as plaintiff. The borrower did not object. In 2016, Fannie Mae recorded an assignment of the mortgage and note to MTGLQ and also executed a power of attorney to MTGLQ, giving it “full power and authority” to take any action that FNMA could take with respect to “mortgage loans, deeds of trust, promissory notes and allonges.” MTGLQ moved to substitute itself as plaintiff; the borrower did not object. In 2018, the trial court scheduled the trial. MTGLQ amended its witness list five days before trial. Although the borrower had not deposed the prior witness, the trial court dismissed the case with prejudice due to the late amendment.
Apparently, the appellate court had previously dismissed MTGLQ’s appeal of the trial court’s order dismissing the foreclosure suit. In 2019, MTGLQ moved to retrieve the original loan documents from the court file, and then amended its motion, citing Fla. R. Jud. P. 2.430(h) that provides ongoing authority to release exhibits and records that are the property of the person or party placing the items in the court records. MTGLQ argued it was entitled to the original note and mortgage as the substituted plaintiff and the assignment (of both the note and mortgage) from Fannie Mae. The borrower argued MTGLQ’s right to enforce did not survive the appellate dismissal because MTGLQ was not the original plaintiff and could not establish a chain of ownership, and a substituted plaintiff does not necessarily own the note or have standing to enforce it.
The trial court denied MTGLQ’s amended motion to retrieve the original loan documents. MTGLQ appealed.
Maryland Fast Track for Vacant and Abandoned Properties Finds New Application during COVID-19 Pandemic
MARYLAND CASE LAW UPDATE
The Maryland “fast track” option for Vacant and Abandoned Properties would require our clients to file a petition pursuant to 7-105.14(f)(4) asserting that the property is vacant and abandoned. The process would look like this:
NEW YORK CASE LAW UPDATE
AXIOM Bank v Dutan, ___AD3d___, 2021 NY Slip Op 00141 [2d Dept 2021]
In a foreclosure action, the Appellate Division affirmed on appeal the judgment of foreclosure and sale, finding that the lender established its strict compliance with RPAPL § 1304, as well as its substantial compliance with paragraph 22 of consolidated mortgage, which required service of specified default notice as condition precedent to acceleration of loan, and further finding that the borrowers’ bare denials of receipt were insufficient to establish their entitlement to summary judgment.
FLORIDA CASE LAW UPDATE
US BANK N.A., AS TRUSTEE V. GARRISON, No. 05-2018-CA-017475 (Fla. 18th Jud. Cir. Jan. 16, 2020)
In a foreclosure suit, the borrower asserted a counterclaim against the lender under the Florida Consumer Collections Practices Act (“FCCPA”), based on the monthly mortgage statement, the included payment coupon and the blank mailing envelope included with the monthly mortgage statements. The trial court granted the lender’s motion to dismiss the counterclaim with prejudice. The court ruled: (1) the monthly mortgage statements were not debt collection activity as that term is understood and defined by the FCCPA [note: the FCCPA does not define the term debt collection activity]; (2) the payment coupons included with the monthly mortgage statements are part of the CFPB’s approved H-30(B) and without any material deviations, are not debt collection activity; and (3) the blank mailing envelope included with the monthly mortgage statements are not debt collection activity.
FLORIDA CASE LAW UPDATE
NAT'L MED. IMAGING, LLC V. LYON FIN. SERVS., 3D20-730 (Fla. 3rd DCA Jan. 13, 2021)The Third District receded from its prior decision which held that the bankruptcy automatic stay provisions are inapplicable in an appellate court where the debtor, who is the defendant in the trial court below and has filed for federal bankruptcy protection, is the appellant.
NEW YORK CASE LAW UPDATE
U.S. Bank N.A. v Auteri, ___AD3d___, 2021 NY Slip Op 00588 [2d Dept 2021]
On an appeal brought by the lender in a foreclosure action seeking review of an order by the Supreme Court that denied the lender’s motion to vacate a stay arising from an owner / borrower’s death and a default judgment against the surviving spouse / co-owner, the Appellate Division reversed, as the decedent’s ownership interest in the mortgaged premises automatically transferred to his surviving spouse by operation of law as they took title as tenants by the entirety, and the deceased borrower’s estate was no longer a necessary party to require substitution before the stay could be lifted as the lender elected not to pursue a deficiency judgment against his estate.
PENNSYLVANIA CASE LAW UPDATE
Frequently, borrowers file for bankruptcy at the 11th hour to halt foreclosure sales. Once a petition for bankruptcy relief has been filed, secured creditors must cease their collection efforts to avoid violating the automatic stay. However, the automatic stay terminates upon a debtor’s dismissal and closure of the bankruptcy case. A Pennsylvania bankruptcy court recently ruled that if a foreclosure sale occurs between the time when a bankruptcy case is dismissed and when it is reinstated, the foreclosure sale is not void and does not violate the automatic stay.
In In re Parker, the debtor filed a petition for bankruptcy relief to prevent a foreclosure sale of her residence. Notably, the debtor failed to file any of the required documents at the time she filed her bare-bones petition. This was the debtor’s fourth bankruptcy filing, and as such, she was familiar with the necessary documents that must be completed and filed in Chapter 13 cases.
The debtor timely filed some, but not all, of the missing documents, and the bankruptcy court thus entered an order dismissing her case. Under section 362(c)(2)(B) of the Bankruptcy Code, at the time a case is dismissed the automatic stay is terminated.