Lender losses on the basis of standing continues to show as a trend in Sunshine State mortgage litigation for the first quarter of 2015, while the question of whether a lender’s/servicer’s business records constitutes inadmissible hearsay is also beginning to show up in Florida foreclosure litigation.
In Bank of New York v. Calloway, a Florida state appellate court reversed a ruling by the lower court throwing out the testimony of a service litigation foreclosure specialist.
The trial court had ruled that the witness’ testimony was inadmissible hearsay and could not be admitted under the business records exception to hearsay. The Bank of New York argued that the trial court abused its discretion in excluding the borrower’s payment history since its witness laid a proper foundation under the business record exception.
“We agree and reverse,” the appellate court said.
The witness, a Resurgent employee, had been asked about the records on the loan maintained by Bank of America. Resurgent was the fourth servicer on the loan. The witness said she had not worked for BofA and did not know how BofA recorded payment information — that was enough for the trial court to rule against admitting the payment history. However, the appellate court disagreed, pointing out that the borrower had not contended that he was not in default; but, only that some of his payments were not accounted for — this, the appellate court said, did not change the fact that the borrower was in default.
“Minor discrepancies in calculations, given the volumes of records transferred from one business entity to another, should not render business records of a successor servicer untrustworthy for purposes of laying foundation for the business record exception given that the trustworthiness of the records has been established,” the appellate court said, cautioning that the decision should not be seen as a “green light” for presenting “robo witnesses” to establish the business record exception.
An appellate court on March 13 reversed an award of attorneys’ fee for homeowners in The Bank of New York Mellon v. Mestre based on a finding that the signatures were fraudulent. The court said the bank correctly asserted that no contractual authority existed to support the attorney’s fees award because, apart from the prevailing party attorney’s fees provision in the mortgage, the trial court, at the urging of the homeowners, found that the signatures on the mortgage were fraudulently executed. As a result, the forged document became void and unenforceable.
A lower court ruling that the lender failed to prove standing was affirmed by the appellate court on March 25 in Lloyd v. Bank of New York Mellon. Susan and James Lloyd signed a mortgage agreement and a promissory note with ACCU Funding Corp. for a loan, but later defaulted on their mortgage. The Bank of New York Mellon, formerly known as The Bank of New York, as trustee for the certificate holders of CWABS Inc., AssetBacked Certificates, Series 2006 filed its complaint against borrowers containing one count for foreclosure of the mortgage and one count to enforce a lost instrument.
The Lloyds’ claimed that the lender failed to prove standing to bring this action.
“We agree,” the appellate court said.
A copy of the mortgage agreement between the borrowers and ACCU was attached to the complaint, along with a copy of the promissory note bearing an undated blank endorsement from ACCU. Before trial, the borrowers filed the original promissory note with the court. The endorsement in blank on the version of the note filed with the initial complaint was altered on the second version of the note, to reflect an endorsement from ACCU to Countrywide Bank. Along with the original note, the lender filed an assignment of mortgage from ACCU to the bank dated one month after suit was filed, although the document also stated that the assignment was intended to “relate back” to the month preceding the filing of the complaint.
The trial court ruled that lender had standing to file the lawsuit and entered a final judgment of foreclosure in favor of the lender. When a plaintiff asserts standing based on an undated endorsement of the note, it must show that the endorsement occurred before the filing of the complaint through additional evidence, such as the testimony of a litigation analyst. Where a later filed promissory note does not include the date upon which the endorsement was made, the plaintiff must provide “record evidence proving that it had the right to enforce the note on the date the complaint was filed.”
Here, the lender called a witness who testified that while assignments do not always strictly occur on the dates shown on the document, he was unable to say whether the note attached to the initial complaint was the most recent copy of that document and could only assume that was the case. He also did not provide any information definitively establishing that plaintiff had possession of the note prior to the time it filed its initial complaint. As a result, the lender was unable to prove it had “standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint.” The lender’s evidence supporting its claim that the assignment of the mortgage “related back” to before the suit commenced was also insufficient to prove standing, the appeals court said in reversing the decision and sending the case back to the trial courts.
Deutsche Bank National Trust Co. v. Boglioli dealt with a lender’s loss on the question of standing. Deutsche Bank appealed the final judgment in favor of the borrower, Theresa Boglioli, in a mortgage foreclosure. “Because appellant failed to present competent, substantial evidence at trial to prove it had standing at the time it filed the complaint, we affirm the final judgment,” the appellate court said. The lender had filed the original note bearing an undated, blank endorsement, an assignment of note bearing an undated, blank endorsement, and an assignment of mortgage executed after the date of the complaint for “value received” on a date prior to the filing of the complaint.
At trial, the lender’s sole testifying witness was unable to testify as to when the note was endorsed and failed to introduce a pooling and servicing agreement that she claimed was the method through which appellant acquired the assignment of note. The witness also acknowledged that the grantor of the assignments was in bankruptcy but did not know the specifics of those proceedings. At the conclusion of trial, the circuit court granted the motion for a directed verdict, entering final judgment in favor of the borrower upon finding that the alleged assignments to the lender were “during the pendency of the Granter’s bankruptcy and therefore of no force or effect.” The evidence at trial failed to demonstrate that the lender had standing to foreclose at the time it filed suit. As a result, the appellate court affirmed the final judgment based on the lender’s failure to demonstrate it had standing to foreclose at the time it filed the complaint.
Wright v. Deutsche Bank National Trust Co. was another lender loss on the basis of standing.
“We reverse the final judgment of mortgage foreclosure because Deutsche Bank did not establish that it had standing at the time it filed the complaint,” the appellate court ruled. A copy of the note attached to the complaint listed GE Money Bank as the lender. During trial, the bank introduced the original note into evidence, which contained an undated endorsement in favor of the bank by GE Money Bank. A representative of the bank’s servicing agent admitted that he did not know when the endorsement was placed on the note. The bank did not present testimony from any other witnesses or present any evidence as to the date of the endorsement. Because the bank did not present any evidence that it had standing at the inception of the lawsuit, reversal was warranted, the court concluded.
In Schindler v. The Bank of New York Mellon Trust Company, the appellate court threw out a lender’s second attempt to foreclose on April 8. Because the lender’s second foreclosure action was based upon the same default raised in the first action, the prior adjudication on the merits barred the bank from once again relying on that default.
On March 4, the bank in Blum v. Deutsche Bank Trust Company lost on appeal when the court ruled that it failed to prove that it complied with contractual requirements to mail a notice of default to the borrower. The “breach letter” admitted into evidence did not meet the requirement in the mortgage to deliver the default notice to appellant at the “notice address,” defined in the mortgage as “the property address.” Deutsche Bank’s failure to comply with the condition precedent to filing suit requires a dismissal of the case, the appellate court said.
In Reive v. Deutsche Bank National Trust Company, the appellate court on March 25 reversed a ruling that the trial court abused its discretion when it denied a motion for a new trial and permitted the introduction of “extremely late listed” witnesses and documents. Ten days before the trial on a mortgage foreclosure which had been pending for three years, the bank filed an unopposed motion to continue the trial because the loan was part of a “service transfer” and a new servicer would have to get acquainted with the loan and trial.
The judge hearing the motion denied it. Four days before trial, the bank provided notice of several new witnesses and documents, to which the defendant objected. Then, over the objection of the defendant, the judge hearing the trial allowed the bank to use witnesses and documents in its case which were not listed in the pretrial stipulation and which constituted a violation of a pretrial discovery order. “We conclude that the court’s denial of the continuance together with the admission of witnesses and documents not timely disclosed to the defendant constituted “surprise in fact” in this case,” the appeals court said, adding that it violated the ruling in a 1981 case and that the failure to give adequate notice constituted a due process violation.
“As the trial court abused its discretion in denying the motion to continue the trial, and then in permitting the introduction of extremely late listed witnesses and documents to the prejudice of the defendant, we reverse and remand for a new trial,” the appellate court concluded.
Bank of New York, as Trustee for the Noteholders CWABS INC., Asset Backed Notes Series 2006SD4006SD4, Appellant, v. Andrew Calloway, Appellate.
Case No. 4D132224, decision on Jan. 7, 2015 (Florida Court of Appeals)
The Bank of New York Mellon, etc., Appellant, v. Hector Mestre, etc., et. al., Appellees.
Case No. 5D141649, decision on Mar. 13, 2015 (Florida Court of Appeals)
Susan Lloyd and James Lloyd, Appellants, v. The Bank of New York Mellon f/k/a The Bank of New York, as Trustee for the Certificate Holders of CWABS, INC., Asset Backed Certificates, Series 20066, Appellate
Case No. 4D133799, decision on Mar. 25, 2015 (Florida Court of Appeals)
Lauren J. Schindler, Appellant, v. The Bank of New York Mellon Trust Company, national association f/k/a The Bank of New York Trust Company, N.A., as successor to JP Morgan Chase Bank, N.A., as Trustee for RAMP 2003RZ4, Appellate
Case No. 4D134825, decison on April 8, 2015 (Florida Court of Appeals)
Deutsche Bank National Trust Company, as Trustee for New Century Home Equity Loan Trust Series 2005C Asset Backed Pass Through Certificates, Appellant, v. Theresa Boglioli a/k/a Theresa Brunetto, Appellate.
Case No. 4D132323, decision on Jan. 7, 2015 (Florida Court of Appeals)
Donald Wright Jr. a/k/a Donald Wright, Appellant, v. Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital MSAC 2007HE6, State of Florida, Department of Revenue, Natasha A. Cox, Tengela McIntosh, Unknown Spouse of Donald Wright, Jr, John Doe, Jane Doe as Unknown Tenant(s) in Possesesion of the Subject Property, Appellees.
Case No. 4D133221, decision on Jan. 7, 2015 (Florida Court of Appeals)
Bruce L. Blum, Appellant, v. Deutsche Bank National Trust Company, Americas As Trustee, Unknown Spouse of Bruce L. Blum, if any, Any and All Unknown Parties Claiming By, Through, Under, and Against the herein Named Individual Defendant(s) who are not know to be dead or alive, whether said Unknown Parties may claim an Interest as Spouses, Heirs, Devises, Grantees or Other Claimants, John Doe and Jane Does, ss Unknown Tenants in Possession, Appellees.
Case No. 4D134271, decision on Mar. 4, 2015 (Florida Court of Appeals)
Carol Reive, Appellant, v. Deutsche Bank National Trust Company, as Trustee of the Residential Asset Securitization Trust 2005A 16, Mortgage Passthrough Certificates, Series 2005P Under the Pooling and Servicing Agreement Dated December 1, 2005, Appellate.
Case No. 4D134408, decision on Mar. 25, 2015 (Florida Court of Appeals)
