Court Opinion

ID: 4206596
Source: CourtListenerOpinion
Date Created: 2017-09-27 15:07:53.276435+00
Date Added: 2024-06-11T14:40:49.112464
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT

  HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE, for the
  Registered Holders of Nomura Home Equity Home Loan, Inc., Asset-
                  Backed Certificates, Series 2007-2,
                             Appellant,

                                     v.

   THE ESTATE OF CHLOE ANN PETERCEN a/k/a CHLOE ANN
     PETERSEN, DECEASED, and MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC., as Nominee for Master Financial, Inc.,
                        Appellees.

                              No. 4D16-3283

                           [September 27, 2017]

   Appeal from the Circuit Court for the Nineteenth Judicial Circuit,
Indian River County; Paul B. Kanarek, Judge; L.T. Case No. 31-2015-CA-
0716.

   Michael D. Starks of Greenberg Traurig, P.A., Orlando, and Patrick G.
Broderick of Greenberg Traurig, P.A., West Palm Beach, for appellant.

   No appearance for appellees.

CONNER, J.

   Appellant (“the Bank”) appeals the trial court’s order dismissing its
foreclosure suit and the order denying its motion for rehearing. The Bank
argues that the trial court erred in dismissing the case based on unpled
and unproven defenses of res judicata and statute of limitations. Although
we agree with most of the Bank’s arguments on appeal, we need not
address them in detail.      Based on Bartram v. U.S. Bank National
Association, 211 So. 3d 1009 (Fla. 2016), clarifying the effect of prior
dismissals on subsequent foreclosure proceedings, it is clear the trial court
erred.

                                Background

   On September 5, 2015, the Bank filed the foreclosure action below
against the defendants, which included the unknown heirs of the
homeowner’s estate. The complaint alleged a default under the note and
mortgage “as of November 1, 2009, and all subsequent payments.”
Thereafter, an attorney ad litem was appointed to represent the unknown
heirs and the estate. The attorney ad litem filed an answer and report on
behalf of the defendants, raising the statute of limitations as an affirmative
defense. Specifically, the affirmative defense stated that the action was
filed over five years after the date of default and that the action was
therefore time-barred. Additionally, the affirmative defense stated that an
earlier foreclosure case brought by the Bank in 2011 had been dismissed
without prejudice in May 2013.

    Subsequently, the Bank moved to amend the complaint to add a party
defendant, attaching a proposed amended complaint. The trial court
granted the motion, ordered that the amended complaint was deemed
filed, and gave the defendants ten days to respond to the amended
complaint. No response to the amended complaint was ever filed by any
of the defendants, nor was anything further filed with the court on their
behalf. The matter proceeded to a bench trial with no appearance for the
defendants.

    At the beginning of the trial, the Bank’s counsel advised the trial court
that the answer brief filed by the attorney ad litem alleged a statute of
limitations issue, and that there was a statute of limitations issue in the
case. He explained that the default occurred in 2009, and that a prior
foreclosure action had been filed in 2011 but was dismissed without
prejudice in 2013. He further explained that this second suit, alleging the
same original default date, was filed in 2015, almost 6 years after that
original default date. The Bank’s counsel argued, before presenting any
evidence, that the appropriate remedy would be to recalculate the amounts
of principal and the amount of fees at the five-year cut-off to bring the
dates within the statute of limitations. The trial court noted that it needed
more time to review the case law on this issue, but that it would listen to
the Bank’s evidence that day. As such, the Bank proceeded to present its
evidence and reargued its earlier position about the statute of limitations.
A recess was taken, after which the Bank’s counsel presented the trial
court with the recalculated figures bringing the amount due within the
five-year limit from the commencement of the suit. The trial court asked
counsel to send it a judgment stating that there was a prior foreclosure
which was dismissed and showing that the recalculated judgment amount
was based on the case law argued by counsel. However, the trial court
also noted that it would still be reviewing the case law before entering its
judgment.

   Three days later, the trial court issued an order of dismissal, stating

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that the Bank had previously filed a foreclosure suit involving the same
property and mortgage, alleging a default as of November 1, 2009 and all
subsequent payments. It noted that the first case was dismissed on May
3, 2013 and that:

      The dismissal of [the first case] which alleges a default on
      November 1, 2009, bars a subsequent suit on the same cause
      of action. Olympia Mortgage Corp. v. Pugh, 774 So. 2d 863 (Fla.
      4th DCA 2000); Singleton v. Greymar Associates, 882 So. 2d
      1004 (Fla. 2004); U.S. Bank National Association v. Bartram,
      140 So. 3d 1007 (Fla. 5th DCA 2014).

Therefore, the trial court dismissed the instant case, finding that the Bank
could not bring a second action alleging a default on the same date.

    The Bank then filed a motion for rehearing, arguing that nobody had
appeared on behalf of the defendants at trial, and that there was therefore
no evidence presented to support the statute of limitations defense which
they had the burden to prove. The Bank additionally argued that the first
action was dismissed without prejudice and that a subsequent action on
that same date would not be precluded on res judicata grounds, which had
not even been properly raised as a defense, nor was it barred by the statute
of limitations because the entire debt did not become due upon default of
payment, but upon the filing of the first action in August 2011, which was
less than five years before this second suit was filed. Alternatively, the
Bank asserted that at least the suit would not have been barred as to the
amounts due within the five-year limit, where it had alleged a default of
not only one date, but of “all subsequent payments.” The trial court denied
the Bank’s motion for rehearing. The Bank gave notice of appeal.

                                  Analysis

   We apply a de novo standard of review to issues of the application of
res judicata and the statute of limitations. Aronowitz v. Home Diagnostics,
Inc., 174 So. 3d 1062, 1065 (Fla. 4th DCA 2015); Philip Morris USA, Inc. v.
Barbanell, 100 So. 3d 152, 157 (Fla. 4th DCA 2012).

    The trial court was of the opinion that a subsequent foreclosure
proceeding is barred when it alleges the same beginning default date
alleged in a prior foreclosure proceeding that was dismissed. As quoted
above from the trial court order, the trial court relied on and cited the Fifth
District’s opinion in Bartram. Bartram dealt with the statute of limitations
defense.

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    As clarified by our supreme court in Bartram, issued a few months after
the trial court’s dismissal of the instant case, the trial court erred. The
Bank’s counsel alerted the trial court that the supreme court’s review of
the Fifth District’s opinion in Bartram was pending at the time of trial, but
as discussed in the order of dismissal, proceeded to urge the trial court to
adopt the position of the Third District in its initial opinion in Collazo v.
HSBC Bank, USA, N.A., 41 Fla. L. Weekly D933 (Fla. 3d DCA Apr. 13,
2016), opinion withdrawn and superseded on reh’g, 213 So. 3d 1012 (Fla.
3d DCA 2016), allowing a subsequent foreclosure where the complaint
used the same beginning default date in a prior proceeding, but limiting
the amount of the judgment to sums overdue within five years of the date
the subsequent suit was filed. The trial court did not find the Collazo
opinion to be persuasive authority, because it was not final and conflicted
with existing case law in this District. Instead, as discussed above, the
trial court dismissed the case. We note that subsequent to the trial in this
case, the Third District withdrew its initial opinion in Collazo and issued
an opinion on rehearing, reversing its initial opinion and determining
dismissal of the action was appropriate because a single date of default
was alleged in the subsequently filed complaint. Collazo, 213 So. 3d at
1013.

    In Bartram, our supreme court clarified a few points of law regarding
the effect of prior dismissals of foreclosure proceedings with regards to res
judicata and the statute of limitations defense. The crux of the analysis
concerning both defenses revolved around the equities of foreclosure and
the recognition that each default in monthly payments creates a
continuing cause of action. Bartram, 211 So. 3d at 1017. (“Our
recognition in Singleton that each new default presented a separate cause
of action was based upon the acknowledgement that because foreclosure
is an equitable remedy, ‘[t]he ends of justice require that the doctrine of
res judicata not be applied so strictly so as to prevent mortgagees from
being able to challenge multiple defaults on a mortgage.’” (alteration in
original)) (quoting Singleton v. Greymar Assoc., 882 So. 2d 1004, 1018 (Fla.
2004)). The supreme court’s analysis was also premised on the standard
language in residential mortgages granting reinstatement of the mortgage
after default, and its agreement with the position of the Real Property Law
Section of the Florida Bar that “[t]he lender’s right to accelerate is subject
to the borrower’s continuing right to cure.” Id. at 1020-21. The supreme
court concluded that “the dismissal of the foreclosure action [has] the
effect of revoking the acceleration.” Id. at 1021.

   Even more pertinent to this case, the supreme court said:

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      Therefore, with each subsequent default, the statute of
      limitations runs from the date of each new default providing
      the mortgagee the right, but not the obligation, to accelerate
      all sums then due under the note and mortgage.

      Consistent with the reasoning of Singleton, the statute of
      limitations on the balance under the note and mortgage would
      not continue to run after an involuntary dismissal, and thus the
      mortgagee would not be barred by the statute of limitations
      from filing a successive foreclosure action premised on a
      “separate and distinct” default. Rather, after the dismissal, the
      parties are simply placed back in the same contractual
      relationship as before, where the residential mortgage
      remained an installment loan, and the acceleration of the
      residential mortgage declared in the unsuccessful foreclosure
      action is revoked.

Id. at 1019 (emphases added). Additionally, after noting that “a dismissal
without prejudice would allow a mortgagee to bring another foreclosure
action premised on the same default as long as the action was brought
within five years of the default per section 95.11(2)(c)[, Fla. Stat.],” the court
went on to say, “[w]hether the dismissal of the initial foreclosure action by
the court was with or without prejudice may be relevant to the mortgagee’s
ability to collect on past defaults,” alluding to a res judicata defense. Id.
at 1020 (emphases added).

   After Bartram, two of our sister courts have addressed res judicata and
statute of limitations issues with fact patterns similar to the instant case.

    In Deslyvester v. Bank of New York Mellon, 219 So. 3d 1016 (Fla. 2d
DCA 2017), the bank filed a foreclosure action in 2012, alleging “the
borrowers had defaulted on their regular monthly payment due on October
1, 2008, ‘and all subsequent payments.’” Id. at 1018. That action was
dismissed for reasons not disclosed in the record. Id. Then in December
2014, the bank filed a second foreclosure action, again alleging the failure
to make the payment due on October 1, 2008, “and all subsequent
payments.” Id. Quoting the language of Bartram that “with each
subsequent default, the statute of limitations runs from the date of each
new default,” the Second District affirmed the trial court order 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.” Id. at 1019-20
(citations omitted). We note it is unclear from the discussion of the facts

                                        5
in Deslyvester that the trial court entered a judgment only for defaults in
monthly payments within five years before the date the last suit was filed,
but we assume that is the case.

    In Forero v. Green Tree Servicing, LLC, -- So. 3d --, 2017 WL 2989493
(Fla. 1st DCA July 14, 2017), the mortgage holder filed a foreclosure action
in February 2010, alleging a “failure to pay on ‘December 1, 2008 and all
subsequent payments.’” Id. at *1. The first suit was voluntarily dismissed
in December 2011. Id. A second suit was filed in February 2013, alleging
the same default language in the first complaint. Id. The second suit was
voluntarily dismissed in April 2013. Id. A third suit was filed in April
2014, again alleging the same default language in the first complaint. Id.
Citing Bartram, the First District affirmed the trial court’s denial of the res
judicata defense, reasoning that the defense did not apply “because the
open-ended series of defaults included different missed payments at issue
in each suit.” Id. at *3. Likewise, relying on Bartram, the First District
affirmed the denial of the statute of limitations defense, concluding “each
missed payment constituted a new default.” Id. at *4. We note that in a
footnote, the First District acknowledged that it did not address “[t]he effect
of the passage of time, if any, upon the amount recoverable via foreclosure
judgment when the initial default in a continuous series of defaults
occurred more than five years before the filing of the complaint,” because
the issue was not addressed in the trial court or on appeal. Id. at *4 n4.

    We recently reached similar results in Depicciotto v. Nationstar Mortgage
LLC, –– So. 3d –– 2017 WL 3500337 (Fla. 4th DCA Aug. 16, 2017). (holding
a foreclosure action was not barred by the statute of limitations where it
alleged and proved separate and continuing defaults that fell within the
five years preceding the filing of the subsequent suit, and res judicata is
not applicable because the subsequent action was predicated upon
“subsequent and different defaults,” which presented a “separate and
distinct issue”).

                                 Conclusion

    Because the trial court dismissed the proceeding below on the grounds
of res judicata and the statute of limitations after a prior proceeding was
dismissed without prejudice, we hold the trial court erred where the
subsequent complaint alleged a continuing default in monthly payments.

   The record indicates that the Bank presented a calculation of the
amount due under the note and mortgage which did not include defaulted
payments and charges which accrued more than five years before the last
suit was filed. We remand the case for the trial court to vacate the order

                                      6
of dismissal and to enter a judgment of foreclosure consistent with this
opinion. If necessary, the trial court may take further evidence on the
appropriate amount of the judgment.

  Reversed and Remanded

TAYLOR and MAY, JJ., concur.

                          *        *        *

  Not final until disposition of timely filed motion for rehearing.

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