Source: http://updates.mwbllp.com/2015_08_02_archive.html
Timestamp: 2019-04-19 22:30:42+00:00

Document:
The District Court of Appeal of Florida, Third District, recently granted rehearing en banc in Deutsche Bank Trust Company Americas v. Beauvais, a case holding that a Florida five-year statute of limitations would bar the re-filed foreclosure action at issue.
In so ruling, the Court posed two factual questions to the parties, and requested amicus curiae briefs from the Mortgage Bankers Association of South Florida, the Business Law Section of The Florida Bar, the Real Property Probate & Trust Law Section of The Florida Bar, the Florida Alliance for Consumer Protection, Fannie Mae, and Freddie Mac.
A copy of the ruling is attached.
The crux of the Appellate Court's original opinion was whether dismissing a foreclosure case without prejudice "decelerated" the acceleration of the debt on which the suit was based. The Court found it did not. As there had been no "deceleration," a mortgagee could not use a subsequent default to accelerate again and re-file outside the five-year statute of limitations the initial acceleration triggered.
The practical implications of this decision are substantial. Under it, if a foreclosure case is dismissed without prejudice more than five years after the initial acceleration without "deceleration," the mortgagee cannot re-file suit.
In granting rehearing en banc, the Court posed two questions to the parties.
First, it asked the parties to identify any material in the record that reflects the parties' treating the dismissal of the prior case as an "adjudication denying acceleration and foreclosure which placed the parties back into their respective contractual positions."
Second, the Court asked what parts of the record showed "if, how, and when" the mortgagee notified the borrower that the dismissal of the prior action was an adjudication denying the mortgagee's initial acceleration.
These questions imply that the Court is asking the parties only to highlight any facts in the record that would cut against the original appellate panel's decision.
By contrast, the Court asked the amici to answer more broad questions about industry practice, as well as the main legal issue — i.e., the interplay between acceleration, dismissal, and any supposed "deceleration."
Specifically, the Court asked a number of questions about standard practices for acceleration and deceleration of mortgages. Most critically, the Court asked whether, in light of Florida Supreme Court precedent, "is deceleration inapplicable if a different and subsequent default is alleged."
Bartram v. U.S. Bank also addresses the statute of limitations for enforcing a mortgage. That case is currently pending in the Florida Supreme Court, with oral argument set for November 4, 2015.
CALIFORNIA | FLORIDA | ILLINOIS | INDIANA | NEW JERSEY | NEW YORK | OHIO | PENNSYLVANIA | TEXAS | WASHINGTON, D. C.
The U.S. Court of Appeals for the Third Circuit recently held that a false statement in a communication from a debt collector must be "material" to be actionable under the FDCPA. In so ruling, the Court found that materiality was a part of the "least sophisticated debtor" analysis.
In that case, a debt collector had purchased credit-card debt from the original lender. That debt collector then hired a law firm to help collect the debt.
The law firm then filed suit to collect the debt. In that underlying case, the law firm obtained a default judgment against the borrower. The law firm then attempted to collect on that judgment by serving a subpoena and written questions on the borrower.
For that subpoena, the clerk of the court's name should have been listed on it. However, the law firm listed a different name, incorrectly. The borrower claimed this was "fraudulent" but still responded to the subpoena.
The borrower then sued the law firm and the debt collector for allegedly violating the FDCPA by including the incorrect name of the court on the subpoena. The trial court granted summary judgment to the law firm and the debt collector, finding the misstatement in the subpoena was not material.
The Third Circuit began by reciting the familiar elements of an FDCPA claim: (1) the plaintiff is a consumer, (2) the defendant is a debt collector, (3) the defendant was attempting to collect a "debt" under the FDCPA, and (4) the defendant violated the FDCPA when attempting to collect the debt.
The Court noted that only the fourth prong was disputed. The borrower claimed the subpoena violated the FDCPA for two reasons. First, the borrower asserted that it allegedly violated 15 U.S.C. 1692e(9) by falsely representing that it was a document approved by a court. Second, and more generally, the borrower alleged the subpoena violated 15 U.S.C. 1692e(10) because it was supposedly false and deceptive.
The Third Circuit recognized that using the incorrect name on the subpoena was technically "false." However, the Court noted that other Circuit Courts of Appeal have required a false statement to be "material" to be actionable under the FDCPA. In that vein, no Circuit Court had disagreed with those decisions.
The borrower countered by pointing out that the word "material" is not included in either section of the FDCPA at issue. The Appellate Court rejected this argument, noting that materiality was a "corollary" of the "least sophisticated debtor" standard by which communications are judged.
The Third Circuit began the discussion of this standard by noting that it is objective. That is, the question is not whether the borrower was misled, but whether the "least sophisticated debtor" would be misled. The Court observed that appellate courts "almost universally employ" this standard, even though it is not in the text of the FDCPA.
The Appellate Court noted that it uses the least sophisticated debtor standard to evaluate claims under 15 U.S.C. 1692e. Using this standard, the Court pointed to rulings by other Circuit Courts of Appeal holding that technically false information does not violate the FDCPA if it is not misleading.
To that end, the Third Circuit held that immaterial information does not affect the goal of the FDCPA — providing reliable information that will aid in the decision-making process, because immaterial information plays no role in that process.
Based on this, the Court interpreted the FDCPA to include a materiality requirement. In doing so, the Court viewed it merely "as a different way of expressing the least sophisticated debtor standard."
The Third Circuit summarized its analysis by saying "A debtor simply cannot be confused, deceived, or misled by an incorrect statement unless it is material."
The Appellate Court stressed that this materiality analysis must still be performed from the viewpoint of the least sophisticated debtor. It once again emphasized that this was not a particularly high bar.
Turning to the facts at issue, the Third Circuit held that it was "obvious" that including the incorrect name of the court was not material. The Appellate Court found there was no way this would affect the least sophisticated debtor's decision-making.
The Third Circuit also rejected the argument that listing the incorrect name made the subpoena "invalid" on state-law grounds.
The borrower next argued that the law firm should be held to a more exacting standard under a line of case law finding attorneys are subject to more scrutiny under the FDCPA. The Third Circuit disagreed, concluding these cases were not applicable because the attorney was not using her status as an attorney to coerce a debtor.
Lastly, the borrower claimed that summary judgment should not have been granted because materiality is a question of fact. The Third Circuit found this argument unpersuasive. It held that, even if materiality is a question of fact (an issue the Court did not decide), the record was devoid of any information suggesting the statement was factually material.
As the statement at issue was not material, the Third Circuit affirmed the grant of summary judgment in favor of the debt collector and its attorneys.
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed a grant of summary judgment to a servicer and its counsel related to a Georgia non-judicial foreclosure.
In so ruling, the Court held that the borrowers had no standing to challenge supposed defects in the assignment of a security deed, and could not sustain a claim for wrongful foreclosure absent evidence that the supposed wrongful conduct actually caused the borrowers' injuries.
That case arose out of the servicer's foreclosure of the borrowers' residence. Based on this foreclosure, the borrowers brought a number of claims against the servicer and its counsel: (1) wrongful foreclosure; (2) civil conspiracy; (3) fraud; and (4) violations of RESPA, the FDCPA, and the federal RICO act.
In that case, the borrowers raised the following issues: (1) there was not an official witness to the assignment of the security deed, (2) signatures on the assignment of the security deed where forged, and (3) the servicer did not properly identify the party with authority to modify the loan in the foreclosure notice as required by law.
The trial court granted summary judgment in favor of the servicer and its counsel, and the borrowers appealed. The Eleventh Circuit addressed only the FDCPA and wrongful foreclosure claims.
The Eleventh Circuit began by rejecting the borrowers' argument that the trial court failed to consider their objections to the magistrate's report and recommendation. The Court found there was nothing in the record to support the borrowers' argument and no requirement for a trial court to address every objection to the report.
Additionally, the Eleventh Circuit found the trial court properly denied the borrowers' request to file a third amended complaint.
The Court held that, although leave to amend is freely granted, the record demonstrated that the borrowers had unduly delayed their request to amend. The Court noted that the borrowers had the information on which the amendment was based in 2011, yet they waited until 2013 — after the close of discovery and the defendants moved for summary judgment — to attempt to amend. Under these circumstances, the Appellate Court found leave to amend was properly denied.
Next, the Eleventh Circuit affirmed the grant of summary judgment on the FDCPA claim, without discussing the factual basis for that claim. The Court found that the borrowers did not make any substantive argument about the claim in their opening brief and, therefore, had abandoned the claim on appeal.
Lastly, the Appellate Court addressed the wrongful foreclosure claim.
The first two bases for the wrongful foreclosure claim were that the assignment of the security deed suffered from technical deficiencies and contained forged signatures. As such, the borrowers claimed the foreclosure based on that assignment was wrongful.
The Eleventh Circuit disagreed. It found that, because the borrowers were not a party to the assignment, they had no standing to challenge any problem with the assignment. In rejecting the borrowers' argument, the Appellate Court stated "[The borrowers] were simply not parties to the assignment and have demonstrated no other right to challenge it."
Part of the borrowers' argument was that the assignment of the security deed could not be recorded because of its defect. But, again, the Eleventh Circuit found that the borrowers were making an argument that did not apply to them. The Court noted that recording protects subsequent purchasers, not the borrowers.
As the final purported basis for their wrongful foreclosure claim, the borrowers alleged that the servicer had incorrectly listed itself — and not the owner of the loan — as the entity with authority to modify the loan.
First, the Eleventh Circuit found that, even if the servicer wrongly listed itself in the foreclosure notice, it had still substantially complied with the Georgia requirement for listing the party with authority to modify the loan. The servicer directed the borrowers to the owner of the loan after the borrowers contacted the servicer. This "substantial compliance" was sufficient under Georgia law.
The Court did not stop there. It dug deeper into the wrongful foreclosure claim, stating that a party can bring that claim only if the defendant allegedly at fault caused the injury at issue.
Here, the Eleventh Circuit noted that the borrowers had defaulted on their loan, which obviously had nothing to do with the loan modification information. As such, any purported mistake by the servicer did not cause the borrowers' injury.
The Eleventh Circuit stated: "The undisputed record reveals that [the borrowers] failed to make two payments on the loan and thereafter made only partial payments. . . . Thus, any injury [the borrowers] suffered is the direct result of their own default on the loan and failure to successfully negotiate and abide by more favorable terms."
The U.S. Circuit Court of Appeals for the Ninth Circuit Court held that, in determining whether a putative class action satisfied the jurisdictional requirements of the federal Class Action Fairness Act ("CAFA"), amounts in controversy as to non-class and class claims may not be aggregated to meet CAFA's diversity requirements.
More specifically, the Ninth Circuit held that, "where a plaintiff files an action containing class claims as well as non-class claims, and the class claims do not meet the CAFA amount-in-controversy requirement while the non-class claims, standing alone, do not meet diversity of citizenship jurisdiction requirements, the amount involved in the non-class claims cannot be used to satisfy the CAFA jurisdictional amount, and the CAFA diversity provisions cannot be invoked to give the district court jurisdiction over the non-class claims."
The plaintiff sued her former employer and a related entity (the "employer defendants") for violations of the California Labor Code. See, e.g., Cal. Lab. Code §§ 201 (timely pay), 226.7 (meal and rest periods), 512 (meal periods), 1194 (minimum wages). She alleged ten causes of action, the first nine of which were brought as class claims on behalf of herself and "certain current and former employees." She also one non-class claim, a "representative claim" under the California Labor Code Private Attorney General Act of 2004 ("PAGA"). Cal. Lab. Code §§ 2698-2699.5.
The employer defendants removed the case to federal court under CAFA, and the plaintiff moved to remand. The lower court denied the plaintiff's motion to remand. This appeal ensued.
As you may recall, in any removal, the "overarching condition" is that "defendants may remove to the appropriate federal district court any civil action brought in a State court of which the district courts of the United States have original jurisdiction." See, e.g., City of Chi. V. Int'l Coll. Of Surgeons, 118 S. Ct. 523, 529 (1997) (citing 28 U.S.C. § 1441(a)).
CAFA "gives federal courts jurisdiction over certain class actions defined in § 1332(d)(1), if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million." See, e.g., Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 552 (2014). Under CAFA, a "'class action'" is "any civil action filed under" class action rules "as a class action." See 28 U.S.C. § 1332(d)(1)(B).
In this case, there was no dispute that to meet the "exceeds $5 million" requirement for original jurisdiction under CAFA the class claims and non-class claims (plus attorney's fees) had to be aggregated. Moreover, there was no dispute that the non-class claim standing alone could not provide a basis for "original jurisdiction" because it was a state law claim and there was no diversity of citizenship between the plaintiff employee and the employer defendants.
For the purposes of its opinion, and based upon the record, the Ninth Circuit Court assumed that the damages sought for the class claims were $ 1,654,874.00, exclusive of attorney's fees, and that the amount sought pursuant to the representative non-class action claim was $3,247,950, exclusive of attorney's fees. The Ninth Circuit noted that these amounts added up to $4,902,824.
It also assumed "without deciding, that [the] addition of reasonable attorney's fees would cause the total recovery for the class claims and the PAGA claim to reach $5,000,001 at least."
Accordingly, to establish original jurisdiction in federal court, the employer defendants argued that the claims should be and could properly be aggregated under CAFA.
Conversely, the plaintiff employee argued that aggregating the class and non-class claims was improper because CAFA focused specifically on "class actions" and that for there to be original jurisdiction under CAFA, the class claims standing alone had to meet the CAFA damages threshold of $5 million. Thus, she argued that because the damages for the class claims were well short of that threshold, there was no original jurisdiction under CAFA, and no other basis for federal original jurisdiction.
The Ninth Circuit agreed with the plaintiff.
Citing Dart, Ninth Circuit held that the language of the statute shows that "in enacting CAFA, Congress was focused on class actions rather than on all representative actions or on cases where a class claim was only a part, perhaps a small part of a civil action." Moreover, it held, CAFA's primary objective is to ensure "federal court considerations of interstate cases of national importance." See also Standard Fire Ins. v. Knowles 133 S. Ct. 1345, 1348 (2013).
Accordingly, the Ninth Circuit held the plain language of the statute "does not suggest that every case with a class claim can be brought in federal court." Moreover, it noted that CAFA defines "class action" as "any civil action filed under class action rules." See 28 U.S.C. § 1332(d)(1)(B). It held that nothing in CAFA "suggest[s] that the mere presence of even a relatively minor class claim in an action will suffice for federal diversity jurisdiction purposes" and that "the same is true for aggregation."
Consequently, the Ninth Circuit Court held that the provisions in CAFA "do not speak to claims that are not part of the class action itself; [and therefore] there appears to be no reason to include those large or small [non-class] claims in the damage threshold calculations."
In sum, the Ninth Circuit held that where a plaintiff files a class action containing class claims and non-class claims, and the class claims do not meet the "CAFA amount-in-controversy requirement" and the "non-class claims, standing alone do not meet diversity of citizenship requirements" the amounts involved in the non-class claims "cannot be used to meet the CAFA [$5 million] jurisdictional amount."
Additionally, the Court held that in such instances, the CAFA minimal diversity provisions "cannot be invoked to give the district court jurisdiction over the non-class claims."
Accordingly, the Ninth Circuit reversed and remanded the case to the district court with instructions to remand it back to state court.
The District Court of Appeal of Florida, Fifth District, recently quashed a trial court's order that a mortgagee's liability for past due HOA assessments was limited to the lesser of the 12 months of assessments prior to the mortgagee's acquisition of title in connection with foreclosure, or 1% of the original mortgage debt, under the safe-harbor provisions of Fla. Stat. s. 718.116.
The Appellate Court held that, although the trial court had correctly interpreted the statute, it lacked jurisdiction to rule on the issue because it failed to specifically reserve jurisdiction to adjudicate the amounts due for HOA assessments in its final foreclosure order.
In this case, a mortgagee filed a foreclosure action to foreclose on a borrower's condominium. In the foreclosure complaint, the mortgagee named the borrower and the condominium association ("HOA"), among others, as defendants. The HOA answered and counterclaimed to foreclose on its claim of a lien for past-due HOA assessments.
The parties stipulated to entry of foreclosure judgment and, following a trial, the court entered a final foreclosure judgment. A foreclosure sale was scheduled. In relevant part, the final foreclosure order stated that "[j]urisdiction of this action is retained to enter further orders as are proper including, without limitation, a deficiency judgment."
The mortgagee bought the property four months later at the foreclosure sale. The HOA then sent an estoppel letter to the mortgagee demanding $30,241.28 in past due HOA assessments. The mortgagee responded by letter and invoked the safe-harbor provisions of Fla. Stat. 718.116.
(1)(a) A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner.
b. One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.
The mortgagee also filed a "Motion to Determine Amounts Due" with the foreclosure court. In its motion, the mortgagee sought adjudication of the dispute between it and the HOA. It moved the court for an order requiring the HOA to "provide a detailed accounting of all past-due assessments."
The HOA opposed the motion, arguing that the mortgagee could not avail itself of the safe-harbor provisions in Section 718.116 because it was the former "servicer of the mortgagee," and not "owner of the subject property." The HOA also argued that the trial court lacked continuing jurisdiction to rule on the mortgagee's motion, because the court did not retain jurisdiction to rule on a section 718.116 claim in the final foreclosure judgment.
The Appellate Court agreed and reversed the trial court's order. The Appellate Court held that a trial court generally loses jurisdiction upon the rendition of a final judgment and expiration of the time allowed for moving to vacate or otherwise alter that judgment. Moreover, it held that the court only otherwise retains jurisdiction "to the extent such is specifically reserved in the final judgment or to the extent provided by statute or rule of procedure."
The Appellate Court held that, although the trial court's order was substantively correct, it was procedurally invalid because the trial court failed to specifically retain jurisdiction (post-judgment) to do anything other than enter a "deficiency judgment."
The Appellate Court held that under controlling precedent, the language "further orders as are proper including, without limitation…" in the foreclosure court's final order was too vague to "specifically" include adjudication of the dispute between the HOA and the mortgagee.
Accordingly, the Appellate Court quashed the trial court's post-judgment order for an accounting of past-due HOA assessments.

References: v. 
 v. 
 V. 
 § 1441
 § 1332
 v. 
 § 1332
 v. 
 § 1332