Court Opinion

ID: 4447119
Source: CourtListenerOpinion
Date Created: 2019-10-16 15:06:01.25278+00
Date Added: 2024-06-11T14:44:57.052462
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

               ZACARIAS CABRERA, on behalf of himself
                   and all others similarly situated,
                              Appellant,

                                    v.

U.S. BANK NATIONAL ASSOCIATION, as trustee, successor in interest
  to BANK OF AMERICA, N.A., as successor by merger to LASALLE
BANK, N.A., as trustee RAMP 2007-RS-1, and SUNTRUST MORTGAGE,
                         INC., a corporation,
                              Appellees.

                             No. 4D18-3537

                           [October 16, 2019]

  Appeal of a nonfinal order from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Howard K. Coates, Jr., Judge; L.T.
Case No. 502017CA005864AN.

   Jon Herskowitz of Baron & Herskowitz, Miami, Rachel Bentley of Legal
Aid Society of Palm Beach County, West Palm Beach, Jeffrey M. Liggio and
Geoff S. Stahl of Liggio Law, P.A., West Palm Beach, and Philip M.
Burlington and Adam Richardson of Burlington & Rockenbach, P.A., West
Palm Beach, for appellant.

   Sara F. Holladay-Tobias, Emily Y. Rottmann and Brittney L. Difato of
McGuire Woods LLP, Jacksonville, for appellee U.S. Bank, N.A., as trustee,
successor in interest to Bank of America, N.A., as Successor by Merger to
LaSalle Bank, N.A., as trustee Ramp 2007-RS-1.

WARNER, J.

    Zacarias Cabrera (Borrower) timely appeals a nonfinal order of the
Fifteenth Judicial Circuit Court that denied his motion for leave to file a
class action counterclaim in a foreclosure case. Because the order
functions as an order denying certification of a class action as to the
compulsory count of the counterclaim, but fails to include findings upon
which the ruling was based, contrary to Florida Rule of Civil Procedure
1.220(d)(1), we reverse. As to the remaining permissive count of the
counterclaim, we conclude that we lack jurisdiction of the order denying
the motion to amend.

   In 2017 the appellee, U.S. Bank National Association (Bank), sued
Borrower to foreclose on a mortgage. This was the third attempt to
foreclose on the same mortgage, the Bank or its predecessor having
voluntarily dismissed the prior two complaints. Borrower answered,
raising affirmative defenses. Borrower served a motion to amend to add a
class action counterclaim against the Bank and SunTrust Mortgage, as
the loan servicer, seeking declaratory judgment and injunctive relief. In
his amended counterclaim, Borrower claimed that the Bank and SunTrust
routinely added to the debt secured by the mortgage the attorney’s fees
and costs incurred in dismissed or unsuccessful prior foreclosure actions.
Thus, Borrowers were being charged fees even though the Bank did not
prevail in the prior actions, despite the fact that the provisions of the
mortgage allowed the Bank to include attorney’s fees only if it prevailed.
The proposed counterclaim designated the class as consisting of
homeowners who may have been serviced by SunTrust but whose
mortgages were owned or held by the Bank or by other lenders. The
counterclaim included the necessary allegations to support a class action:
numerosity, typicality, representative status, predominance of common
questions of law and fact. It sought a declaratory judgment against the
Bank and SunTrust, as well as damages to compensate borrowers for this
improper practice by the Bank as to borrowers. It also added a count
against SunTrust for violation of the Florida Consumer Collection
Practices Act, pursuant to section 559.72, Florida Statutes (2017), in
connection with the unauthorized inclusion of attorney’s fees in the
amounts due. The counterclaim demanded damages incurred by the
entire class for the statutory violations.

   In response, the Bank filed a notice of voluntary dismissal of its
foreclosure complaint. However, this did not deprive the court of
jurisdiction, as the filing of a motion to amend to add a counterclaim is
treated the same as a pending counterclaim for purposes of Florida Rule
of Civil Procedure 1.420(a)(2). See Our Gang, Inc. v. Commvest Sec., Inc.,
608 So. 2d 542, 544 (Fla. 4th DCA 1992). Under that rule, “[i]f a
counterclaim has been served by a defendant prior to the service upon the
defendant of the plaintiff's notice of dismissal, the action shall not be
dismissed against defendant's objections unless the counterclaim can
remain pending for independent adjudication by the court.” Fla. R. Civ. P.
1.420(a)(2) (emphasis added).

  In response to the motion for leave to file class action counterclaim, the
Bank argued that the counterclaim would unnecessarily complicate a

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simple foreclosure, that it added a third party, and that the claims failed
to state a viable claim for relief under Florida law.

   After a short non-evidentiary hearing, the trial court entered an order
granting Borrower’s motion to amend insofar as it allowed him to amend
to assert compulsory counterclaims, but it denied the motion to assert
those claims as a class action. From that order, Borrower appeals.

    We first address our jurisdiction. Although an order denying a motion
to amend claims is ordinarily regarded as a nonfinal, non-appealable
order, see Hochstadt v. Sanctuary Homeowners Ass’n, 882 So. 2d 1094,
1096 (Fla. 4th DCA 2004), where the order effectively denies class
certification, it is appealable under Florida Rule of Appellate Procedure
9.130(a)(3)(C)(vi). That rule allows appeal of orders determining “whether
to certify a class.” While titled as a “motion for leave to file class counter-
complaint,” it appears that the motion was a request to certify a class to
file a counterclaim. See IndyMac Fed. Bank FSB v. Hagan, 104 So. 3d
1232, 1236 (Fla. 3d DCA 2012) (“With respect to the characterization of
motions, Florida courts place substance over form.”). The trial court did
not deny the motion to amend the counterclaim of Borrower to the extent
that it was compulsory; it dismissed only the class action status of the
counterclaim. Thus, this case is similar to Key Club Associates, L.P. v.
Mayer, 718 So. 2d 346 (Fla. 2d DCA 1998), in which the Second District
treated an order granting a motion to dismiss a class action counterclaim
as appealable under rule 9.130 where the denial of the counterclaim was
based upon the trial court’s analysis of the class action rule in concluding
that the counterclaim should be dismissed. So too in this case, the trial
court denied the class action component only while leaving intact
compulsory counterclaims. To the extent then that the class action claims
involve a compulsory counterclaim, the order effectively denied class
action certification as a matter of law. “We conclude that the function
intended for rule 9.130(a)[(3)(c)(vi)], to permit review of class certification
issues, justifies this court's acceptance of jurisdiction over this nonfinal
appeal.” Id. at 347 (footnote omitted).

   Although the Bank contends that allowing a class action counterclaim
would unfairly prejudice it by increasing the complexity of a common
foreclosure complaint, that same concern would be true of almost any
counterclaim asserting a class action.           Furthermore, any class
counterclaim would bring additional “parties” into a lawsuit. Yet Florida
Rule of Civil Procedure 1.220(c) specifically includes a “counterclaim”
within its terms. Therefore, these differences in and of themselves do not
prevent the assertion of a class counterclaim.

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    The trial court allowed Borrower to amend to state compulsory
counterclaims without defining which of the two counts of the proposed
counterclaim it deemed compulsory. In 4040 Ibis Circle, LLC v. JPMorgan
Chase Bank, 193 So. 3d 957, 960 (Fla. 4th DCA 2016), a foreclosure
proceeding, we explained that a compulsory counterclaim was one that
bears a “‘logical relationship’ to the plaintiff’s claims in that they arise out
of the ‘same aggregate of operative facts as the original claim.’” (quoting
Londono v. Turkey Creek, Inc., 609 So. 2d 14, 20 (Fla. 1992)). “By
definition, a permissive counterclaim does not arise out of the transaction
or occurrence that is the subject matter of the main claim.” Id. The claims
held to be compulsory in 4040 Ibis Circle included claims for breach of
contract in the application of the borrower’s principal and interest
payments to the paydown of an escrow account for force-placed insurance.
But the court also ruled that the counts of the counterclaim based upon
violation of the Florida Unfair Insurance Trade Practices Act were
permissive. They were based upon the participation in a force-placed
insurance scheme of “undisclosed commissions, illegal kickbacks.” These
claims did not arise out of the same operative facts as the foreclosure
complaint.

    In Count I of the counterclaim attached to the motion to amend here,
the class representative seeks a declaration that the practice of adding
attorney’s fees and costs from unsuccessful foreclosure actions against
borrowers to the balance of their mortgages violates Florida law and
requires that the Bank and SunTrust compensate borrowers to whom this
occurred. These claims relate to the operative facts of the foreclosure,
because Borrower alleges that his mortgage was increased by adding
attorney’s fees from the prior unsuccessful actions to his balance. The
complaint is against the Bank and SunTrust, its servicer. They all relate
to the inclusion of attorney’s fees from unsuccessful attempts to foreclose
on the mortgage in the amount due on the mortgage and promissory note.
The counterclaim is compulsory, because it involves the same aggregate
operative facts of the main claim and defense, i.e., whether the attorney’s
fees from unsuccessful suits had been included inappropriately in the
amount claimed due under the mortgages.

    Count II is asserted against SunTrust only and as a class action. Thus
it is not a true counterclaim but a third party claim. The class action rule
does not include third party claims within its provisions. Even if this may
be loosely determined to be a counterclaim asserted against the loan
servicer as an agent of the Bank, it is not a compulsory counterclaim. The
counterclaim seeks damages for breach of the Florida Consumer Collection
Practices Act by adding attorney’s fees to the balance of mortgages, similar
to Count I. However, Count II is also filed on behalf of borrowers on any

                                       4
mortgage SunTrust serviced, thus involving lenders other than the Bank
in this suit. Such a claim would require review of mortgages held by other
lenders.     It further alleges that SunTrust used various means of
communication and attempted to collect debts involving interstate
commerce, which is a different element than the foreclosure proceeding.
It would require proof that the debts were “consumer debts” within the
meaning of section 559.55(6), Florida Statutes (2006). These elements are
all beyond the operative facts of the foreclosure complaint. Generally,
“actions to collect debts are not compulsory counterclaims to actions
predicated on the violation of consumer protection type laws.” See Equity
Residential Props. Tr. v. Yates, 910 So. 2d 401, 404 (Fla. 4th DCA 2005).
Logically, the opposite should also be true, that actions for violations of
consumer protection laws would not constitute compulsory counterclaims
to actions to collect a debt. We conclude that this claim is permissive, and
thus the trial court’s order allowing compulsory claims only to proceed
effectively denied the motion to amend to assert the permissive
counterclaim. It did not deny it based upon the denial of class certification
as a matter of law. Therefore, as to Count II, the order is not an appealable
final order. This appeal is dismissed as to the denial of the motion to
amend to include Count II of the counterclaim.

    As the Count I counterclaim is compulsory, and the trial court allowed
Borrower to file his compulsory counterclaim, the issue remains as to
whether it could be asserted as a class action for all borrowers similarly
situated. Since rule 1.220 permits the assertion of class actions by way of
counterclaims, as a matter of law, this claim may be asserted. Motions to
amend should be liberally granted. See Fla. R. Civ. P. 1.190(a) (“Leave of
court shall be given freely when justice so requires.”). Once filed, whether
this should proceed as a class claim depends upon an analysis of the
factors for maintaining a class action set forth in Florida Rule of Civil
Procedure 1.220. The rule requires a trial court to make findings of fact
and conclusions of law supporting its ruling to either certify a class or
deny certification. See Fla. R. Civ. P. 1.220(d)(1). The trial court truncated
this review by denying the motion to amend. Yet to determine whether the
court has abused its discretion, the appellate court must have the benefit
of the findings of fact and conclusions of law by the trial court. Fidelity
Nat’l Title Ins. Co. v. Grosso, 110 So. 3d 521, 522 (Fla. 4th DCA 2013).

   We therefore reverse and remand for the trial court to grant the
amendment to assert Count I as a class action and then to consider
whether the counterclaim can and should be asserted as a class action.
As to Count II, the appeal is dismissed because it is a nonappealable order.

                                      5
   Reversed in part; dismissed in part; and remanded for further
proceedings.

DAMOORGIAN and CONNER, JJ., concur.

                         *       *        *

  Not final until disposition of timely filed motion for rehearing.

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