### D ISTRICT 

### C OURT 

### O F 

### A PPEAL 

### O F 

### T HE 

### S TATE 

### O F 

### F LORIDA

F OURTH D ISTRICT

CAN FINANCIAL, LLC , Appellant,

v.

DARYL R. KRAZMIEN a/k/a DARYL KRAZMIEN and LAURA KRAZMIEN a/k/a LAURA M. KRAZMIEN , Appellee s

.

No. 4D 18

- 356

[ August 1, 2018 ]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Joseph Marx, Judge; L.T. Case No.

502017CA001330XXXXMB

- AN.

Damian G. Waldman of Law Offices of Damian G. Waldman, P.A., Largo, for appellant.

Preston J. Fields, Sr. of Preston J. Fields, P.A., Palm Beach Gardens, for appellee.

F ORST

, J

.

Appellant Can Financial, LLC (“Bank”) appeals a final summary judgment that was entered in favor of Appellee Laura Krazmien (“Borrower”). The summary judgment was premised on the trial court’s

determination t hat Bank’s foreclosure complaint against Borrower was barred by the statute of limitations applicable to foreclosure actions, as the complaint was filed more than five years after Borrower’s debts were discharged in bankruptcy. The trial court erred in its application of the

statute of limit ations to this case . Thus, w e reverse.

Background

Borrower ’s per sonal debts were discharged in C hapter 7 bankruptcy 1 on August 31, 2009. She made no further payments on her note and mortgage after the discharge. Bank filed an in rem action for foreclosure

1 11 U.S.C. § 727 ( 2009 )

.2 on February 2, 2017 alleging a February 5, 2012 default on Borrower’s monthly installments , followed by subsequent defaults as Borrower ha d made no payments since Ja nuary 2012. Borrower answered the complaint

with the affirmative defense that Bank had only five years from the date that Borrower’s debts were discharged in bankruptcy (August 31, 2009) to file the complaint , and that Bank failed to do so.

Borrower rel ied upon this statute of limitations defense in moving for summary judgment . In granting the motion, the trial court made the following findings and conclusions of law: the debt memorialized in the note and mortgage was discharged in bankruptcy; no subseq uent defaults occurred after the debt was discharged; Bank filed for foreclosure more than five years later; the foreclosure was barred by the f ive year statute of

limitations of section 95.11(2)(c), Florida Statutes ( 2009 ) ; and a valid lien on the property would remain throughout the statute of repose. The order is before us on appeal.

Analysis

“ The stand ard of review for a trial court’ s ruling on a summary judgment is de novo. ” Cabo Flats Jupiter, LLC v. Dawley , 236 So. 3d 464, 465 (Fla. 4th DCA 2018)

. Likewise, “[g]enerally, ‘the issue of whether [a] claim is barred by the statute of limitations is a question of law subject to

de novo review.’” Access Ins. Planners, Inc. v. Gee , 175 So. 3d 921, 924 (Fla. 4th DCA 2015) (second alteration in original) (quoting Beltran v. Vincent P. Miraglia, M.D., P.A.

, 125 So. 3d 855, 859 (Fla. 4th DCA 2013)).

A C hapter 7 “ bankruptcy discharge extinguishes onl y one mode of enforcing a claim

— namel y, an action against the debtor in personam

— while leaving intact another

— namel y, an action against the debtor in rem .”

Johnson v. Home State Bank , 501 U.S. 78, 84 (1991) ( discussing 11 U.S.C. §§ 522(c)(2), 524(a)(1) ). “ A mortgage is an interest in real p roperty that

secures a creditor’ s right to repayment. ” Id. at 82. “[A] creditor’ s right to foreclose on the mortgage survives or passes through the bankruptcy. ” Id.

at 83.

Following a bankruptcy discharge , a debto r ha s “ three options with respect to property subject to a lien or mortgage: (1) surrender the property; (2) redeem the prope rty; or (3) reaffirm the debt.” Alvarez v. Bank of Am. Corp.

, No. 14

- CV

- 60009

- KAM, 2015 WL 12670510, at *3 (S.D. Fla. Apr. 17, 2015) (quoting In re Steinberg , 447 B.R. 355, 357 (Bankr. S.D. Fla. 2011) ).

W hen a debtor is unwilling to enter into a reaffirmation3 agreement and unable to pay off the mortgage, the mortgagee may nonetheless determine that it does not wish to obtain its collateral or dispossess the debtor. The debtor may continue to make periodic mortgage payments in order to discourage the mortgagee from fore closing on the property. The mortgagee may accept such payments and not seek to

foreclose. Section 524(j) [of the Bankruptcy Code] recognizes this possibility and specifically empowers the mortgagee to take action to seek or obtain regular mortgage payments, in the ordinary course of business, in lieu of pursuing an in rem

foreclosure.

Id. at *4 ( alteration in original) (quoting In re Steinberg , 447 B.R. at 359).

In Alvarez , a mortgagor sought to void a mortgage by arguing that her Chapter 7 bankruptcy charge either extinguished the mortg age or constituted a default on the entire mortgage, thereby commencing the statute of limitations, which had expired when she sued. Id. at * 1

- 2. The court found no legal support for either theory, finding that only her personal liability was extinguishe d, not her in rem liability, and that there was no evidence the mortgagee had accelerated the loan. Id. at * 2

- 3. In

Deutsche Bank Trust Co. Americas v. Nash , 136 So. 3d 1267 (Fla. 2d DCA 2014)

, the Second District Court of Appeal held similarly, fin ding the bankruptcy discharge only extinguished personal liability, not in rem liability. 2 Id. at 1269.

Here, Borrower exercised a de facto four th option by simply ceasing
payments. To the extent the trial court found that no subsequent defaults

occurred after the debt was discharged , it was in error. The terms of the note and mortgage remained intact , as a bankruptcy discharge “extinguishes only ‘the personal liability of the debtor.’” Johnson , 501 U.S. at 83 (quoting 11 U.S.C. § 524(a)(1)). Bank was i n no way prejudiced , with respect to the statute of limitations, by not foreclos ing upon Borrower ’s first failure to pay her monthly insta l lment after the discharge. Rather

, “[w]ith each subsequent default, the statute of limitations r[an] from the

date o f each new default providing the mortgagee the right, but not the obligation, to accelerate all sums then due under the note and mortgage.”

Bartram v. U.S. Bank Nat ’l Ass’n

, 211 So. 3d 1009, 1019 (Fla. 2016).

Because Bank alleged a default date within fi ve years of the date that it

filed its complaint, the trial court erred in finding the action was barred by

2 The discharge order in Nash stated, in relevant part, that “a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the debtors’ property after the bankruptcy.” Nash , 136 So. 3d at 1269.4 the statute of limitations.

Borrower cites no authority for the proposition that the bankruptcy discharge “acted as the acceleration of th e debt for foreclosure purposes,”

an d we can find none. As noted above, there is similarly no support for the trial court’s finding s that “[n]o subsequent defaults occurred after the default was discharged” and “[t]he foreclosure action was barred by the

statute of limitations because the foreclosure action was filed more than five (5) year s after the debt was discharged

. ” These findings are contrary

to Bartra m and a myriad of opinions that have followed. See, e.g.

, U.S.

Bank Nat ’ l Ass ’ n for Lehman XS Tr. Mort g

. Pass

- Through Certificates, Series

2007

- 16N v. Morelli

, No. 3D17

- 286 , 2018 WL 2708699

, at *4 (Fla. 3d DCA June 6, 2018) (“ It is now settled law that . . . when a foreclosure complaint alleges a borrower is in default for any payment due within five years of the filing of the complaint, the action is not barred by section 95.11(2)(c)

of the Florida Statutes. ”); HSBC Bank USA, Nat ’ l Ass ’ n for Registered Holders of Nomura Home Equity Home Loan, Inc. v. Estate of Petercen , 227 So. 3d 640, 643

- 44 (Fla. 4th DCA 2017) ( holding similarly ) ; Desylvester v. Bank of N.Y. Mellon , 219 So. 3d 1016 , 1019

- 20 (Fla. 2d DCA 2017) ( relyi ng

upon Bartram in denying the affirmative defense of statute of limitations, concluding “the allegations of the complaint in the underlying action that the borrowers were in a continuing state of default at the time of the filing of the complaint was sufficient to satisfy the five

- year statute of

limitations.” ) ; Forero v. Green Tree Servicing, LLC , 223 So. 3d 440 , 445 (Fla. 1st DCA 2017) (rely ing upon Bartram to conclude “each missed payment constituted a new default”).

Thus, the foreclosure complaint , filed within five years of a continuing default, was not barred by the statute of limitations and Borrower’s bankruptcy discharge did not aff ect Bank’s ability to initiate an in rem foreclosure action. As such, the trial court erred in entering summary judgment for Borrower.

Conclusion

As Bank’s foreclosure complaint was not barred by the statute of

limitations , we reverse the summary judgment in favor of Borrower and remand for further proceedings consistent with this opinion.

Reversed and Remanded.

W ARNER and M AY
, JJ., concur

.5 * * *

Not final until disposition of timely filed motion for rehearing.