DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE FOR THE 

HOLDERS OF THE ELLINGTON LOAN ACQUISITION TRUST 2007-2, 

MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-2,

Appellant,

v.

JAMES HESS a/k/a JAMES H. HESS, JULIAANN HESS a/k/a

JULIANN HESS a/k/a JULIAAN HESS, THE GABLES AT 

BONAVENTURE HOMEOWNERS' ASSOCIATION, INC., TOWN CENTER 

CLUB AUTHORITY, INC., HOUSEHOLD FINANCE CORPORATION III, 

and UNITED STATES OF AMERICA,

Appellees.

No. 4D16-3594

[October 18, 2017]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, 

Broward County; Kathleen D. Ireland, Judge; L.T. Case No. 

CACE12011556.

Charles P. Gufford of McCalla Raymer Leibert Pierce, LLC, Orlando, for 

appellant.

Jonathan Kline of Jonathan Kline, P.A., Weston, for appellees James 

Hess a/k/a James H. Hess and Juliaann Hess a/k/a Juliann Hess a/k/a 

Juliaan Hess.

BUCHANAN, LAURIE E., Associate Judge.

HSBC Bank USA, National Association, as Trustee for the Holders of 

the Ellington Loan Acquisition Trust 2007–2, Mortgage Pass-Through 

Certificates, Series 2007-2 (“the Bank”), appeals the trial court’s order 

granting final judgment in favor of James and Juliaann Hess (“Borrowers”) 

for lack of standing. We reverse because the Bank established its standing 

to foreclose by virtue of its possession of the note indorsed in blank.

In April of 2012, the Bank filed a one count verified mortgage 

foreclosure complaint against Borrowers. In its complaint, the Bank 

alleged that it was the holder of the note and was entitled to enforce the 
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terms thereof. The copy of the note attached to the complaint contained a 

single, undated blank indorsement from Fremont Investment & Loan 

(“Fremont”), the original lender.

Borrowers answered the complaint and generally denied all of the 

Bank’s material allegations. They also raised several affirmative defenses 

including lack of standing. The lack of standing affirmative defense was 

premised on Borrowers’ argument that the indorsement appearing on the 

note reflected that Fremont had already indorsed the note to “an unknown 

third party.” Notably, Borrowers did not challenge the authenticity or 

enforceability of the indorsement in their answer.

The matter proceeded to a bench trial where the Bank presented its 

case through the testimony of a single witness. The witness, a default 

specialist employed with the Bank’s servicer, identified the original note 

and testified that the indorsement must have been placed on the note prior 

to the filing of the Bank’s complaint as the very same indorsement 

appeared on the copy of the note attached to the complaint. The original 

note was admitted into evidence without objection, and Borrowers 

stipulated on the record that the original note contained an indorsement. 

The Bank also moved into evidence, over hearsay and trustworthiness 

objections, a recorded 2008 loan modification agreement showing that the 

original principal amount of $446,500 was increased to $474,365.48. 

As additional evidence of standing, the Bank also introduced an 

assignment of mortgage dated September 16, 2011 showing that 

Borrowers’ mortgage “together with the note” was assigned to the Bank.

During cross-examination, defense counsel asked the witness if, during 

the boarding process, the servicer checks or verifies that the original lender 

of any given loan is still in existence. The witness responded that he did 

not know. Defense counsel then generally asked “[i]f there was a problem 

with an entity, would that may[be] affect the go, no go in the boarding 

process that you’ve described earlier,” and the witness responded “I would 

think so, yes.” Based on the witness’s response, defense counsel then 

successfully introduced an exhibit consisting of printouts from the FDIC 

website showing the legal status of Fremont. Defense counsel then showed 

the exhibit to the witness and asked him to confirm that Fremont “was 

involved in a voluntary liquidation and closing” and had been inactive 

since July 25, 2008. The witness confirmed that, according to the exhibit, 

Fremont voluntarily closed on July 25, 2008.

After the parties rested, the matter proceeded to closing where the 

arguments primarily centered on the issue of standing. The Bank argued 

that it clearly established standing as holder of the note by virtue of its 
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possession of the note indorsed in blank. Borrowers countered that the 

Bank was required to provide “testimony to show that the [i]ndorsement 

was placed on the note prior to [Fremont] becoming shutdown.” They also 

argued that the Bank could not establish standing via the 2011 

assignment of mortgage because that assignment was ineffective in that it 

was executed after Fremont voluntarily closed in 2008.

The trial court agreed with Borrowers and ruled that the Bank could 

not rely on the assignment of mortgage to establish standing. Specifically, 

the court reasoned that because Fremont was no longer in existence at the 

time the assignment of mortgage was executed, it had no authority to 

assign the note or mortgage to the Bank. Moreover, although the court 

acknowledged that the Bank possessed the original note indorsed in blank, 

it insisted that “[e]ven though a party has possession of a note, they still 

have to have . . . appropriate possession.” Accordingly, the court found 

that the Bank lacked standing and entered final judgment in favor of 

Borrowers. This timely appeal follows.

“A crucial element in any mortgage foreclosure proceeding is that the 

party seeking foreclosure must demonstrate that it has standing to 

foreclose” at the time the lawsuit was filed. McLean v. JP Morgan Chase 

Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “A negotiable 

instrument, such as the promissory note in this case, is enforceable by the 

holder, a nonholder in possession of the instrument with the rights of a 

holder, or a person not in possession but entitled to enforce it.” Caraccia 

v. U.S. Bank, Nat’l Ass’n, 185 So. 3d 1277, 1279 (Fla. 4th DCA 2016). 

A “holder” is defined as “[t]he person in possession of a negotiable 

instrument that is payable either to bearer or to an identified person that 

is the person in possession.” § 671.201(21)(a), Fla. Stat. (2016).

In cases where standing is established by possession of a note bearing 

a blank indorsement, “‘possession of the note is the significant core 

element to be analyzed.’” Ortiz v. PNC Bank, Nat. Ass’n, 188 So. 3d 923, 

925 (Fla. 4th DCA 2016) (quoting Rodriguez v. Wells Fargo Bank, N.A., 178 

So. 3d 62, 65 (Fla. 4th DCA 2015) (Conner, J., concurring)). In that regard, 

“the fact that a copy of a note is attached to a complaint does not 

conclusively or necessarily prove that the [b]ank had actual possession of 

the note at the time the complaint was filed.” Id. If, however, “the [b]ank 

later files with the court the original note in the same condition as the copy 

attached to the complaint,” we have held that “the combination of such 

evidence is sufficient to establish that the [b]ank had actual possession of 

the note at the time the complaint was filed and, therefore, had standing 

to bring the foreclosure action, absent any testimony or evidence to the 

contrary.” Id.
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In the present case, the Bank sought to establish standing via its status 

as holder of the note bearing an undated blank indorsement. The note 

attached to its complaint reflected said blank indorsement. The Bank later 

filed the original note in the same condition as the copy attached to the 

complaint with the court. The combination of such evidence was more 

than sufficient to establish that the Bank had standing to initiate and 

maintain the foreclosure action. See Ortiz, 188 So. 3d at 925. 

Furthermore, insomuch as the trial court appears to have concluded that, 

irrespective of the Bank’s status as holder of the note, the Bank was 

required to have “appropriate possession” of the note in order to enforce 

the instrument, this reasoning is flawed as a holder is entitled to enforce 

a note even if it “is not the owner of the instrument or is in wrongful 

possession of the instrument.” § 673.3011, Fla. Stat. (2016) (emphasis 

added). Accordingly, even if the assignment of mortgage was invalid and 

the Bank was in wrongful or “inappropriate” possession of the note, it does 

not change the fact that the Bank, as the undisputed holder of Borrowers’ 

note indorsed in blank, had standing and was entitled to enforce the note. 

See id.

Borrowers acknowledge the presumption of standing holding in Ortiz, 

but maintain that contrary evidence was presented in this case to show 

lack of standing, namely the FDIC website printouts. Specifically, they 

argue that because Fremont closed on July 25, 2008, which predates the 

filing of the complaint, it “no longer had authority or legal capacity to 

create a blank [i]ndorsement, [and therefore] the alleged blank 

[i]ndorsement transferred no interest to any subsequent holder.” There is 

a major flaw in Borrowers’ argument: the blank indorsement is undated. 

Had the indorsement been dated, then evidence showing that the 

indorsement was placed on the note after Fremont closed could potentially 

have served as contrary evidence of standing. However, as the blank 

indorsement appearing on Borrowers’ note is undated, and as Borrowers 

never denied Fremont’s authority to place the indorsement on the note in 

their pleadings, no such “contrary” evidence exists in this case. See 

§ 673.3081(1), Fla. Stat. (2016) (“In an action with respect to an 

instrument, the authenticity of, and authority to make, each signature on 

the instrument is admitted unless specifically denied in the pleadings.”); 

Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010)

(citing section 673.3081 and holding that the borrowers could not 

challenge the authenticity of the indorsement because they never placed 

its authenticity at issue in their pleadings).

Accordingly, we reverse the final judgment entered in favor of Borrowers 

and remand for entry of final judgment of foreclosure in favor of the Bank.
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Reversed and remanded.

WARNER and LEVINE, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.