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

IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT

RONALD ST. CLAIR, ) ) Appellant, ) ) v. ) Case No. 2D14-2111 ) U.S. BANK NATIONAL ASSOCIATION, ) Trustee Terwin Mortgage Trust 2005 ) 8HE Asset-Backed Certificates, Series ) 2005 8HE, ) ) Appellee. ) ) Opinion filed July 17, 2015.

A ppeal from the Circuit Court for Lee County; James R. Thompson, Senior Judge. Michael E. Chionopoulos, Fort Myers, for A ppellant.

Elizabeth T. Frau of Ronald R. Wolfe & A ssociates, P.L., Tampa, for Appellee.

VILLANTI, Chief Judge.

Ronald St. Clair seeks review of the trial court's final judgm ent of

foreclosure in favor of U.S. Bank. Because the trial court err ed in finding that U.S. Bank demonstrated it had standing to foreclose, we reverse.- 2 - After St. Clair defaulted on a loan issued by original mortgag or Lenders Direct Capital Corporation, U.S. Bank brought foreclosure proce edings. St. Clair defended, alleging that U.S. Bank failed to prove standing. Al though U.S. Bank maintained that the mortgage and note were sold to it by Lender s Direct, neither document had been indorsed. Desp ite the lack of indorsements, the mortgage and note were placed in a trust with U.S. Bank as the trustee and the lo an was serviced by Specialized Loan Servicing (SLS). Based on these facts, U.S. B ank asserted that it had the rights of a holder as a "nonholder in possession" of the do cuments. At a nonjury trial, U.S. Bank relied on a pooling service agreement, a defau lt notice letter, and a fee payment schedule to show that it had standing to foreclose. Ag reeing with this argument, the trial court ruled in favor of U.S. Bank and this appeal followed. Under section 673.3011, Florida Statutes (2014), a person enti tled to enforce a negotiable instrument must be either: (1) the holder of the instrument, (2) a "nonholder in possession of the instrument who has the rights o f a holder," or (3) a person not in possession but who has the right to enforce a los t, destroyed, or stolen instrument or an instrument paid by mistake. A holder is a per son in possession of the negotiable instrument that is payable either to bearer or to th e holder. § 671.201(21)(a), Fla. Stat. (2014). A person in possession of the instrument bu t who is not the original lender can still be a holder, but only if the instrument bears a special indorsement in his or her favor or a blank indorsement. See McLean v. JP Morgan C hase Bank Nat'l Ass'n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). Absent a specia l or blank indorsement, "the mere delivery of a note and mortgage, with intention to pa ss the title, upon a proper consideration, will vest the equitable interest in the person t o whom it is so delivered."- 3 - Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 1 25 (Fla. 4th DCA 2015) (quoting McLean, 79 So. 3d at 173) . However, possession of the instrument alone is an insufficient basis to prove standing to foreclose. See Murray v. HSBC Bank USA, 157 So. 3d 355, 358 (Fla. 4th DCA 2015). The person trying to enfo rce the instrument must demonstrate that he or she had standing as of the time the comp laint is filed. McLean, 79 So. 3d at 173. This court reviews issues of standing in for eclosure cases using the de novo standard of review. Boyd v. Wells Fargo Bank, N.A., 14 3 So. 3d 1128, 1129 (Fla. 4th DCA 2014). Here, U.S. Bank attempted to prove it had standing under secti on 673.3011(2) as a nonholder in possession of the instrument with the rights of a holder. 1 It argued below and on appeal that its possession of the note a nd mortgage, along with evidence of its servicing the loan through SLS, its pooling and servicing agreement with SLS, and SLS's notice of defaul t letter sent to St. Clair, prov e that U.S. Bank had standing to enforce the instrument. But contrary to U.S. Bank' s argument, mere possession is an inadequate basis on which to affirm the lower court's final judgment. See Murray, 157 So. 3d at 358. Because mere possession was inadequate to establish standing, U.S. Bank was required to show that it received the instrument from a holder with enforcement rights. This is known as the "shelter rule." Id. But there was no competent evidence presented below to show that U.S. Bank had a ctually acquired the note and mortgage from Lenders Direct. While U.S. Bank attempt s to rely on its pooling

1 Because the note and mortgage were not indorsed in blank or spe cially indorsed to U.S. Bank, U.S. Bank is unable to establish its sta nding as a holder of the instrument. See § 673.3011(1).- 4 - and servicing agreement with SLS to show that it had standing, this document does not contain any mention of Lenders Direct or its alleged transfer o f the note and mortgage into the U.S. Bank trust. Likewise, the payment schedule shows only that Lenders Direct was servicing the loan prior to SLS; it does not indicat e that Lenders Direct

transferred the loan to U.S. Bank or to SLS. While there is a document that indicates Lenders Direct sold the rights to the instrument, it does not i ndicate to whom Lenders Direct sold the rights. Without evidence establishing who Lend ers Direct sold the instrument to, the question of standing remains an open one. T his court cannot fill in the blanks of an incomplete chain in order to determine that U. S. Bank actually acquired the instrument, as it contends, from holder Lenders Direct vers us a nonholder third party. See id. at 358-59 (noting that because "[t]he transfere e does not enjoy the statutorily provided assumption of the right to enforce the ins trument that accompanies a negotiated instrument . . . the transferee must account for p ossession of the unindorsed instrument by proving the transaction through which the transferee acquired it" (quoting Anderson v. Burson, 35 A.3d 452 (Md. 2011) (intern al quotations omitted))). The documentation here was simpl y too inadequate to constitute competent, substantial

evidence of U.S. Bank's standing. The only document that purports to indicate that Lenders Direc t sold the rights of the instrument to U.S. Bank is a letter from SLS to S t. Clair, stating that SLS would be servicing the loan after Lenders Direct had sold the n ote and mortgage. But without reference to whom the loan was sold, this letter alone cannot substantiate U.S. Bank's claim that it obtained the note and mortgage from Lender s Direct. See Seffar, 160 So. 3d at 126-27 (finding that a letter from a loan service r to the mortgagor- 5 - informing him of the transfer of servicing rights was insuffici ent to establish that the servicer had standing when the letter did not address the servi cer's specific right to enforce the instrument). Thus, U .S. Bank's claim suffers from a fatal failure of necessary proof. Ultimately, the problem with U.S. Bank's attempt to establish standing to foreclose is that it relies on a "paper trail" that beats aroun d the bush but never axes the tree necessary to establish the legal requirement of standing. We cannot, as advocated by U.S. Bank, presume standing simply because it serviced the l oan. Longstanding case law prevents us from doing so. See Withers v. Sandlin, 18 So. 856 (Fla. 1896). Accordingly, it was error for the trial court to rule in favor of U.S. Bank. Reversed and remanded for further proceedings.

KHOUZAM and LUCAS, JJ., Concur.