All entries for February 2016

Notice of default is a condition precedent to bringing a foreclosure. Except when it isn't.

A recent decision by the Fourth DCA illustrates an interesting phenomenon—where a court can simply use the lack of “prejudice” to the defendant to excuse a clear and express condition precedent to bringing an action in the first place where enforcing the condition precedent would likely result in elevating form over substance.   

In the case of Caraccia v. U.S. Bank, Nat. Ass'n, 185 So. 3d 1277, 1278 (Fla. 4th DCA 2016), the lender sent a letter of default to an address for the borrower (a P.O. box) that had supposedly been provided by the U.S. Postal Service, and the borrower responded to the default notice using the P.O. box address as the return address.  However, the mortgage stated clearly that any default letter must be sent to the borrower at the property address unless prior notice had been given to the bank by the borrower listing a new address for notices.

In determining that the failure of the bank to send the notice to the property address—a technical breach of its notice obligations under the mortgage—was not a valid basis for the borrower to move for dismissal, the court cited a 2015 Fifth DCA case (Gorel v. Bank of N.Y. Mellon, 165 So. 3d 44, 47) for the proposition that a breach of a condition precedent will not stand as a defense to “the enforcement of an otherwise valid contract” unless the defendant can show prejudice. 

This holding looks to be another excellent example of cases where bad facts make bad law. Though this is likely the ‘just’ result under these facts, the holding poses an interesting slippery slope argument that potentially renders into question the enforceability of any express condition precedent and represents an interesting bypassing of the parties’ agreement by the Fourth DCA using only a similar holding from the Fifth DCA as its legal foundation.  It will be interesting to see how far courts will be willing to go in ignoring clear expressions of the parties’ intentions in a written contract where there are less technically compelling facts at play.

If you have a contract and need advice on either enforcing it, defending yourself from enforcement, or just learning more about your legal rights under the contract’s terms; contact the business attorneys at Icard Merrill today.  

Fighting the Solomonic partitioning of assets in divorce cases

As the the Bible story goes, King Solomon proposed to deal with the squabbling of two women fighting over a baby each claimed as her own by dividing the child in half—the ultimate compromise in the face of absolute and mutually exclusive options.  Of course, in the bible verse, King Solomon’s wisdom is borne out (the judgment is avoided when the true mother of the child is determined by her response of offering to give up the child rather than see it hurt), though less clear is the wisdom of the ‘splitting the baby’ approach that has long been a hallmark of divorce courts. 

The Fourth DCA recently addressed the legislative protections in place against the Solomonic method for dividing a couple’s assets in divorce in the case of Pierre v. Pierre, 185 So. 3d 1264, 1264 (Fla. 4th DCA 2016).  In Pierre, the trial court awarded the wife a vehicle, the marital residence, and held that each husband and wife would keep his or her own retirement and be responsible for the individual debt each had accrued.  However, the court made and recorded in the judgment no findings as to the value of the assets and liabilities when it carved them between husband and wife, in contravention of § 61.075(3), Florida Statutes. 

Thus, despite being protected by an abuse of discretion standard (such that a judgment will stand unless “no reasonable [person] would take the view adopted by the trial court”), the trial court was reversed and the judgment overturned.   The moral of the case for trial judges should be that simply dividing assets by what ‘feels’ right or equitable without careful determination and notation of the actual value of those assets will result in abuse of the court’s discretion and allow successful challenges by those that feel the baby was not properly divided at the trial court level.

In order to help ensure your assets are protected in a divorce and that you are not on the wrong end of a Solomonic division in your divorce case, contact the skilled and experienced family law attorneys at Icard Merrill for a consultation today. 

TILA a sword as well as a shield in residential foreclosure defense

Despite missing the statute of limitations for bringing a counterclaim of Truth in Lending Act (“TILA”) violations, defendant homeowners were entitled to a defense of setoff for TILA violations under 15 U.S. Code § 1640, found the Fourth DCA in its recent opinion rendered in Monnot v. U.S. Bank, Nat. Ass'n, 41 Fla. L. Weekly D474 (Fla. 4th DCA Feb. 24, 2016). 

The Fourth DCA helped homeowner borrowers turn a long-used sword, the TILA civil remedies, into a shield against lending institutions in Monnot.  Despite the fact that the consumer could not bring a successful claim against the lender under TILA because the statute of limitations had long run (a common bar for homeowners facing foreclosure—a time when the homeowner in many cases first gets a professional review of the loan documents on their behalf ), the court determined that a defense of setoff for those TILA violations could still be maintained—effectively resurrecting the viability of the claims as a shield in a foreclosure suit long after the claims should have been dead.

TILA (along with its implementing articles, Regulation Z) allows consumers to recoup actual damages (which can be tricky to prove in TILA actions since it often requires the consumer to show they would not have taken the loan had they known the truth at the time), statutory penalties of $200 to $2,000 (in purchase-money residential loans), recoupment of financing fees and charges, and attorneys’ fees and costs.  Awards of these damages could help reduce or offset the lender’s damages against the consumer by thousands of dollars and help the distressed borrowers avoid judgments in excess of the property value in question (and, therefore, bankruptcy in many cases). 

If you are facing foreclosure or other action to collect a debt or enforce a promissory note, contact the litigation attorneys of Icard Merrill, who have been serving residents of Sarasota, Manatee, Charlotte, Lee, and other nearby counties for decades.

Businesses also enjoy protections under FDUTPA

A recently decided Third District case illustrates some of the protections available to non-consumers under Florida’s Deceptive and Unfair Trade Practices Act (Fla. Stat. §501.201 et seq.).  As the court noted in Off Lease Only, Inc. v. LeJeune Auto Wholesale, Inc., 41 Fla. L. Weekly D467 (Fla. 3d DCA Feb. 24, 2016), reh'g denied (Mar. 23, 2016), a business can bring to light and get judicial help to remedy the deceptive and unfair trade practices of their competitors, as well as seek attorneys’ fees for prevailing in such an action.

In this particular instance, Off Lease alleged dastardly schemes by LeJeune Auto Wholesale and sought monetary and injunctive relief as a result.  The Third DCA found that, while LeJeune was correct that Off Lease was not entitled to monetary relief, injunctive relief was still a remedy available to anyone—not just consumers—under FDUTPA after the legislature’s 2001 amendment to the law which changed the terms pertaining to injunctive relief and attorneys’ fees from “consumer” to “person” (of which a legal entity is considered one). 

The court also found that injunctive relief was appropriate under FDUTPA for future violations even if the offending entity voluntarily ceased the complained-of activity prior to the action where the complaining party can show such future violations were likely to occur.

This ruling provides illustration of potentially helpful news for businesses that are aware of conduct of other businesses that have the likelihood of hurting the public through fraud, deceit, or other deceptive and unfair practices.  If you or your business is in need of an attorney to help determine your rights and options in a deceptive and unfair trade practices case, consult with Icard Merrill’s experienced business litigation team today. 

Two Strikes and banks are out in foreclosure dismissals

In the always fascinating world of residential foreclosure cases, the specter of Ahab’s “free house” lurks in the minds of attorneys and litigants alike.  The phenomenon is rarely seen and is most often prevented through creative (if outright strained) reasoning by courts who seem intent on helping prevent monolithic banks which pay far too little attention to their customers and accounts from being prejudiced by monolithic foreclosure law firms who pay far too little attention to their cases and clients.   The “free house” ranges somewhere between a dream and a myth for distressed homeowners in foreclosure. 

A recent case in the Fourth DCA might represent the first step towards that dream for some homeowners faced with egregiously poor showings by banks and their attorneys in foreclosure suits.  In Nolan v. Mia Real Holdings, LLC, the Fourth DCA applied a commonly used procedural mechanism to the seemingly always abstract world of foreclosures to determine that, a second dismissal of the foreclosure action--even where the foreclosing entity has changed at some time during the process--will result in adjudication on the merits of the case.  185 So. 3d 1275, 1276 (Fla. 4th DCA 2016). 

In Nolan, the appellate court determined that a dismissal of the foreclosure action by the bank would stand as an adjudication on the merits since it was the second dismissal (the case was first voluntarily dismissed by the predecessor bank which assigned its interest subsequent to that first dismissal) in the action against the homeowner.   Since the second dismissal (again, voluntary) involved an action on the same note and alleging the same breach, the trial court determined (and the appellate court agreed) that judgment should be entered in favor of the borrowers. 

The court left the bank some wiggle room in its opinion, however, stating that the lender would be “required to refile a lawsuit against the homeowners alleging a new and separate breach by non-payment of the note.”  This point does not squarely address the issue which is commonly presented in situations such as this; wherein the bank has already accelerated the note and declared all payments due.   In such cases, trial courts have allowed the Bank to ‘change its mind’ by decelerating the note and declaring a new breach on unpaid installments that would have been due subsequent to the previous acceleration.  This bit of contract sleight of hand fails to address the mechanism by which a bank could undo its decision to cancel all future payments in favor of a lump sum due, but is a commonly applied trick to avert the “free house” phenomenon which would likely, on the balance, not be a just and equitable result in most instances.

If you are in the process of dealing with a default or foreclosure and have questions about the process, contact Icard Merrill’s foreclosure litigation attorneys, who have experience dealing with the often turbulent foreclosure arena and can help answer your questions and guide you through the process.