Court Opinion

ID: 4230564
Source: CourtListenerOpinion
Date Created: 2017-12-20 16:07:28.337193+00
Date Added: 2024-06-11T14:42:32.831430
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT

              FREDERICK SABIDO and JONELLE SABIDO,
                           Appellants,

                                     v.

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK,
     SUCCESSOR TO JP MORGAN CHASE BANK, NATIONAL
ASSOCIATION, AS TRUSTEE FOR CWALT, INC., ALTERNATIVE LOAN
 TRUST 2007-J1, L’HERMITAGE COMMUNITY ASSOCIATION, INC.,
                     and CITIBANK,N.A.,
                          Appellees.

                              No. 4D16-2944

                           [December 20, 2017]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Barry Stone, Senior Judge; L.T. Case No. CACE 14-
008945.

   Roy D. Oppenheim, Geoffrey E. Sherman, Jacquelyn Trask, and Yanina
Zilberman of Oppenheim Pilelsky, P.A., Weston, for appellants.

   Elliot B. Kula, W. Aaron Daniel, and William D. Mueller of Kula &
Associates, P.A., Miami, for appellee, The Bank of New York Mellon.

PER CURIAM.

   This is a foreclosure case complicated by multiple transfers of the
mortgage and note and by the fact that the original note was lost. The
complexity of the case caused the trial to extend over four days between
February and June, 2016. Because the appellee Bank 1 failed to comply
with the requirements of the lost note statute, we reverse the final
judgment of foreclosure.

   The plaintiff in a foreclosure case “must tender the original promissory
note to the trial court or seek to reestablish the lost note under section

1 According to the answer brief, the appellee is “The Bank of New York Mellon
f/k/a The Bank of New York, Successor to JP Morgan Chase Bank, National
Association, as Trustee for CWalt, Inc., Alternative Loan Trust 2007-J1.”
673.3091, Florida Statutes.” Servedio v. U.S. Bank Nat. Ass’n, 46 So. 3d
1105, 1107 (Fla. 4th DCA 2010). Here, because the Bank did not tender
the original promissory note, it could not enforce the note unless it
reestablished the note pursuant to the lost note statute.

     Section 673.3091(1), Florida Statutes (2016) provides:

        (1) A person not in possession of an instrument is entitled to
        enforce the instrument if:

           (a) The person seeking to enforce the instrument was
           entitled to enforce the instrument when loss of
           possession occurred, or has directly or indirectly
           acquired ownership of the instrument from a person
           who was entitled to enforce the instrument when loss of
           possession occurred;
           (b) The loss of possession was not the result of a transfer
           by the person or a lawful seizure; and
           (c) The person cannot reasonably obtain possession of
           the instrument because the instrument was destroyed,
           its whereabouts cannot be determined, or it is in the
           wrongful possession of an unknown person or a person
           that cannot be found or is not amenable to service of
           process.

Thus, subsection 673.3091(1)(a) required that the Bank prove one of two
things, that it either

        1. “was entitled to enforce the instrument when loss of
        possession occurred,”

or

        2. “has directly or indirectly acquired ownership of the
        instrument from a person who was entitled to enforce the
        instrument when loss of possession occurred.”

The Bank did not know when the note was lost, so it could not establish
that it was entitled to enforce the instrument when loss of possession
occurred. See Peters v. Bank of New York Mellon, 227 So. 3d 175, 179 (Fla.
2d DCA 2017). Under the Uniform Commercial Code, the term “person
entitled to enforce” an instrument means

        (1) The holder of the instrument;

                                      -2-
      (2) A nonholder in possession of the instrument who has the
      rights of a holder; or
      (3) A person not in possession of the instrument who is
      entitled to enforce the instrument pursuant to s. 673.3091 or
      s. 673.4181(4).

§ 673.3011, Fla. Stat. (2016).

   Here, the original lender was Washington Mutual Bank. Because the
note was not indorsed, later transferees were not entitled to enforce it as
holders. § 671.201(21)(a), Fla. Stat. (2016). The Bank was then required
to comply with the second option in section 673.3091(1)(a) set forth
above―the Bank had to establish the chain of transactions leading to its
acquisition of ownership, so that it could show that it “acquired
ownership” from a person “entitled to enforce the instrument when loss of
possession occurred.”

   A party seeking to reestablish a lost note may meet the statutory
requirements “either through a lost note affidavit or by testimony from a
person with knowledge.” Home Outlet, LLC v. U.S. Bank Nat’l Ass’n, 194
So. 3d 1075, 1078 (Fla. 5th DCA 2016).

   The only affidavit placed into evidence was the affidavit from an
employee of Chase (the entity that took over servicing in 2012). “If the
party relies on a lost-note affidavit, the affidavit must establish that
whoever lost the note “was entitled to enforce it when the loss of possession
occurred; the loss of the note was not the result of a transfer or lawful
seizure; and [the bank] cannot reasonably obtain possession of the note
because of the loss.”” Id. (quoting Figueroa v. Federal National Mortgage
Ass’n, 180 So. 3d 1110, 1114 (Fla. 5th DCA 2015)). The lost note affidavit
placed into evidence in this case contained this language:

      6. Upon information and belief, the loss of possession is not
      the result of the original note being canceled or transferred to
      by the party seeking to enforce the note.

(emphasis added). In addition, the affidavit was admitted for the sole
purpose of establishing that Chase searched its own business records.
The affidavit made no reference to “whoever lost the note,” did not state
that any of the putative transferees, Countrywide, CWALT, Inc., or the
Bank, were ever entitled to enforce the note, and did not state
unequivocally that the note was not lost as the result of transfer or lawful
seizure. In short, the affidavit fell short of the statutory requirements for
reestablishing a lost note.

                                    -3-
   While a lost note may also be reestablished by testimony from a person
with knowledge, the Bank’s witness was an employee of Chase – a servicer
that took over in 2012. By that time, the note had theoretically changed
hands three times. The witness did not establish that Countrywide or
CWALT were ever entitled to enforce the note.

   It was not necessary for the Bank to establish “exactly when, how, and
by whom the note was lost.” Boumarate v. HSBC Bank USA, N.A., 172 So.
3d 535, 537 (Fla. 5th DCA 2015). The plaintiff was required, however, to
prove that it “acquired ownership of the instrument from a person who
was entitled to enforce the instrument when loss of possession occurred.”
§ 673.3091(1)(a). As in Beaumont v. Bank of New York Mellon, 81 So. 3d
553, 555 (Fla. 5th DCA 2012), the Bank “offered no proof of anyone’s right
to enforce the note when it was lost.” See also Wells Fargo Bank, N.A. v.
Robinson, 168 So. 3d 1279, 1279 (Fla. 5th DCA 2015) (finding reversible
error in admitting a copy of the note into evidence where “Wells Fargo failed
to prove who lost the note, when it was lost, and who had the right to
enforce the note when it was lost. Wells Fargo also failed to produce any
evidence of ownership at the time of the loss.”).

   Because of a failure of proof under the lost note statute, we reverse and
remand for dismissal.

GROSS, MAY and KLINGENSMITH, JJ., concur.

                            *        *         *

   Not final until disposition of timely filed motion for rehearing.

                                    -4-