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.
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.
The non-resident cost deposit has long been a tool used by local litigators to harass and annoy out of state plaintiffs and their counsel. The requirement pursuant to Florida Statutes § 57.011 forcing an out of state plaintiff to deposit $100 with the clerk when instituting an action to cover potential future costs for a prevailing defendant seems to achieve little other than to give persnickety—or, perhaps vexatious—litigants a handy procedural tool for getting a case dismissed on somewhat more arcane procedural grounds. The bond is substantially less than the amount of costs normally incurred in defending an action, so it provides little of the protection which presumably was in the legislature’s mind when enacting the law.
Continuing a trend away from this type of ‘form above substance’ procedural trickery, the Second DCA recently decided to turn the tables on a crafty defendant seeking dismissal of a mortgage foreclosure case on the basis of failure to timely pay a non-resident cost bond by the out of state plaintiff bank. Dyck-O’Neal, Inc. v. Duffy, 40 Fla. L. Weekly D2660a (Fla. 2nd DCA 2015). In this case, the Second DCA observed that, though the plaintiff had failed to either post the bond within twenty days following notice of the requirement or more than one month before a hearing on defendant’s motion to dismiss the complaint, the defendant had failed to show any prejudice, which meant the case should not have been dismissed.
As the appellate court noted, the trial court has discretion to consider the facts of the case and the coercive—but not punitive—nature of § 57.011 in securing the crucial sum of $100 from a carpetbagger plaintiff. Thus, compliant (albeit tardy) plaintiffs can avoid a tricky procedural pitfall which could cost them attorneys’ fees on top of costs.
As always, procedural traps abound for the unwary litigants. Contact mortgage and real estate litigators that are experienced in dealing with these issues (and a host of others) for help navigating your legal issue.