All entries for March 2017

Dismissal for Lack of Standing in Foreclosure From Anomalous Indorsement on Assignment of Mortgage

The question of who "holds" the note and mortgage (even where, as is often the case, the 'holder' cannot physcially hold the note and mortgage because they are lost) is one of the most often litigated aspects in residential foreclosures.  Borrowers in default and looking for ways to keep their home (or at least to stay in the home mortgage free for as long as possible), often find themselves getting a crash course over the internet on concepts such as the "holder" of the note, indorsements, allonges, indorsements in blank, and standing.  Speak to a borrower that is a veteran of a multi-year, multi-action foreclosure and an uninitiated attorney may even learn a few things about these terms as well. 

Another recent case before the Fourth DCA touches on several of these concepts and helps give more guidance to those defaulted borrowers seeking to stem the virtually inevitable tide of foreclosure of their home. As the court in PennyMac Corp. v. Frost, 2017 Fla. App. LEXIS 3441 (Fla. 4th DCA 2017) stated, the note in question was originally indorsedn in blank by the original lender, however, that indorsement was marked "void."  Subsequently, an allonge and blank indorsement was executed by a successor in interest to the original lender.  The borrower argued (and the trial court agreed) that the original void indorsement rendered any subsequent indorsement invalid for purposes of standing without more steps being taken as a nonholder in possession of the note and with the rights of a holder.  

Foreclosure actions can be challenging and very confusing to the uninitiated.  Talk to an attorney in the foreclosure group at Icard Merrill today if you have questions about your home and mortgage.  

Seeking Dismissal for Fraud on the Court as a Litigation Tool

The Second DCA issued an opinion this month on a topic that has become a bit of a hot button issue and technique among defense firms in recent months--the practice of seeking dismissal on the basis of a plaintiff's alleged fraud on the court.  In Duarte v. Snap-On, Inc., 2017 Fla. App. LEXIS 3414 (Fla. 2d DCA 2017), the Court outlined what has become a popular tool for defense counsel; the defense finds discrepancies between a complaint, the party's discovery responses, and the party's deposition testimony and highlights those discrepancies in a motion to dismiss the case on the basis of an attempted fraud against the court.  

The reasoning is sound, if less than scrupulous; the defense gets a second chance to dismiss the case without a trial if it can show discrepancies (which exist for all parties--plaintiffs and defendants--in virtually all actions), or at worst, simply gets an opportunity to attempt to paint the other party as a liar or a non-credible witness.  The Second DCA decision in Duarte helps outline the high burden for dismissal for fraud on the court by stating that the party seeking dismissal needs to prove by "clear and convincing evidence" that 

his opponent "sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier of fact or unfairly hampering the presentation of the opposing party's claim or defense

Thus, neither a mistake nor a lie is sufficient to justify dismissal in most cases.  As has long been the case, the court points out that: 

Generally, unless it appears that the process of trial has itself been subverted, factual inconsistencies or even false statements are well
managed through the use of impeachment at trial or other traditional discovery sanctions, not through dismissal of a possibly meritorious claim.

However, some attorneys seem to find that simply impeaching a party at trial is less effective than attempting to poison the court against that party before the trial even begins, which may explain the recent proliferation this blogger has perceived in use of this technique in recent months.  

Inequitable Conduct Doctrine in Divorce Cases

The discretion of the court in divorce actions is very broad, and the judges overseeing those actions have the ability to impose relief over a wide range of possibilities.  One area in which the court normally exercised that broad discretion is in the area of attorneys' fees.  For instance, upon a finding of need for one party, the court can impose ongoing liability for paying for that party's fees in a case on the other party if the court believes that party can pay for those fees.  Divorce actions are the only place you will generally see that type of fees where a party has not yet prevailed or where there have not been sanctions imposed.  

Sanctions is another vehicle for awarding fees, and in divorce actions, one type of sanctions are on the basis of what is called "inequitable conduct" doctrine.  As explained in a case this month before the Second District, the inequitable conduct doctrine requires a finding that the party which is to pay fees "has exhibited egregious conduct or acted in bad faith." Myrick v. Myrick, 2017 Fla. App. LEXIS 3971 (Fla. 2d DCA 2017) citing Bitterman v. Bitterman, 714 So. 2d 356, 365 (Fla. 1998).  But, the court also mentions that "[s]uch awards are rarely applicable and should be reserved for extreme cases in which a party litigates vexatiously and in bad faith" and that courts imposing the inequitiable conduct doctrine must make certain findings of fact that show and illustrate the bad faith in question.  Id.

In this case, the trial court found that:

[the] entire case, since it began at the Former Husband's relocation on January 9, 2013, was made necessary by the Former Wife's conduct, her actions, and her life choices. . . . [T]he Court specifically finds a pattern of excessive, expensive, and needless litigation. . . . [T]he Court finds that the Former Wife's actions have been abusive of the judicial system, not of taking up this Court's time, but to the two years of the parties' [*7] respective lives and that of their young son.

However, the appellate court found that these statements were not specific enough with respect to the bad faith upon which the inequitable conduct doctrine was based in this case.  The trial court did indicate it believed the wife may have "mental problems or perhaps it is just an obstinate refusal to appreciate that she is not a good person to parent the parties' child," however, that was not a specific finding of bad faith. The appellate court also mentioned that it is a high bar for bad faith conduct capable of supporing an attorney fee award under this doctrine, since it would not be enough to simply show that a party acted in a way that is "selfish and contrary to the best interests of the child." 

This case gives a small glimpse into the challenges and behaviors that are too often found in divorce actions (as well as mentioning the expense related to protracted litigation).  If you need help in a divorce action or just have quesitons about your rights and how you might avoid the expenses of a protracted divorce action, contact the family law attorneys of Icard Merrill today. 


Employer Enjoys Presumption of Harm in Non-Compete Injunction

In another high water mark for protections for employers, the recent case of Allied Universal Corp. v. Given, 2017 Fla. App. LEXIS 3459 (Fla. 3d DCA 2017), outlined various protections for employers from other cases and resulted in a case that is likely to be often cited by employers in their battles against former employees in the area of non-compete litigation.  

The Third DCA starts by broadly construing Section 542.335, Florida Statutes (Valid restraints of trade or commerce) by referencing protections for "goodwill associated with an "ongoing business or professional practice," among other things, as a basis for injunctive relief.  What makes the construction broad is that the Court found that the employer needed only establish that there were legitimate business interests, at which time there became a "rebuttable presumption of irreparable injury for purposes of obtaining a temporary injunction under section 542.335(1)(j)."  

Unlike in many instances, the employer here was not required to show any actual interference with specific current or potential customers, nor any actual injury or damage.  Simply having legitimate interests was enough to flip the burden of proof to the employee, who was expected to have evidence at the temporary injunction stage to show that the employer had not been damaged.  Understandably, the employee was unable to show the absence of injury of any sort to the employer at that early stage and an injunction was entered against the employee.  Often, the granting of an injunction is enough to break the employee's resistance and to end the case (since now the employee is unemployed, which makes funding ongoing litigation difficult, if not pointless). 

Proof of Mailing Acceleration Notice Remains Critical in Foreclosure

A recently decided case in the Second District Court of Appeals, Allen v. Wilmington Trust, N.A., 2017 Fla. App. LEXIS 3970 (Fla. 2d DCA 2017), touched on the fact requirements that must be proven in a foreclosure action with respect to the acceleration notice.  This notice has been the subject of a great many defenses at the trial court level and the subject of a fair amount of appeal briefs, as well.  

As is normally the case in foreclosures, the current servicer of the loan in Allen was not the entity in interest at the time the notice of acceleration was purported to have been sent.  Therefore (againa as is common in foreclosure cases), the new servicer detailed how it "onboarded" the previous bank's documents and reviewed them, and the designated servicer representative spoke confidently about what had happened with documents in the previous file (despite the fact that she could not have personally known what had transpired previously).  The witness said that a letter was in the file and was dated which gave notice of the acceleration and that, because the letter was in the file, it must have been sent to the borrower (because, "servicers aren't in the habit of generating letters that they don't send" claimed the witness).  However, no envelope with postage paid or other proof of actual mailing appeared in the file.  

The trial court allowed the foreclosure to continue, but the Second DCA reversed, finding that simply drafting a document does not indicate the sending of that document and that, while onboarding does allow introduction of documents into evidence of the previous bank or servicer, it does not qualify a witness to testify about what happened with certain documents without actual personal knowledge of (at a minimum) knowledge of the business practices of the party that was purportedly mailing the notice. Thus, in Alen, the Second DCA again reminds banks that, yes, they must prove that they sent an acceleration notice to the borrower in order to foreclose the property and that it is not enough to simply indicate that the letter existed and was drafted at some point. 

Icard Merrill Attorney Mark Martella helps unearth "Fabulous Finds"

Icard Merrill's own Mark Martella

continues his community outreach initiatives in an interesting way by chairing the Charlotte County Homeless Coalition's committee that was in charge of opening a resale store called "Fabulous Finds."  Mr. Martella's efforts were noted in this blurb about the store:

The Charlotte County Homeless Coalition is excited to announce the opening of its first re-sale shop, “Fabulous Finds.” Mark Martella, Esq., former President and Board Member Emeritus, serves as Chair of the Earned Income Committee that worked on this project for four years to get the doors opened. The shop features a boutique clothes section as well as furniture, electronics, appliances and other items. All profits go towards the Coalitions mission to prevent hunger and homelessness. It’s located at 4265 Tamiami Trail, Port Charlotte, Florida.

Those in the area are encouraged to see if they can find something "Fabulous" for themselves while benefitting those in need in the Charlotte County community.


Fabulous Finds Grand Opening