The homeowner’s motion to dismiss looked almost perfect…

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This looked like a perfect motion to dismiss foreclosure complaint filed by the homeowner’s attorney. It had several points, which were all well substantiated by the existing case law. I expected the hearing on the motion to be relatively easy. And, in fact, prior to hearing, the two opposing counsel had a conversation, and the homeowner’s counsel was so articulate that the bank’s counsel almost conceded everything. She actually appeared not to be opposed to what the homeowner’s attorney responded he wanted the bank to do: re-file the case.

Not so fast. The hearing turned out to be much more controversial than expected, and it was not the bank’s attorney who created the controversy, but the judge. The homeowner’s first point was that the bank failed to make the allegation, as required by the Supreme Court of Florida Form 1.944 of foreclosure complaints, that plaintiff is the owner and holder of the note and mortgage. The judge immediately contravened by citing Section 673.3011, Florida Statutes: “A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument”.

The homeowner’s attorney said it was just a catchall provision. But it’s actually a sticking point: there’s a bunch of cases stating you have to be the owner to foreclose, and there’s a bunch cases that say you don’t need to. In practical terms, it means the Supreme Court should make a final determination, when there’s a case on point presented for review. In the interim, as a minimum the trial judge should explain why he chooses one point of view over the other.

I believe the homeowner’s attorney should have pointed it out, but he didn’t. An even more important argument, though, is that only the note is a negotiable instrument (possibly not, under some new theories out there), but the mortgage is not. And the bank is foreclosing on a mortgage as opposed to trying to collect on a note. Therefore, Section 673.3011 should only apply to note collections.

Because the homeowner’s attorney did not say anything like that, his case from this point on started to go downhill. It turned out the plaintiff, BAC Home Loan Servicing, did state in the complaint it was “a designated holder”. Everybody agreed it was inartful, but it didn’t go anywhere further.

The note attached to complaint did not have an endorsement, but the original note filed with the court did have an endorsement. The homeowner’s attorney said, according to 2nd DCA in Feltus, the complaint must be amended to conform to evidence. The judge said there’s a 3rd DCA case that states amending complaint is not necessary. But even if there is such a case, there are again 2 conflicting authorities on the same issue, and the involvement of the Supreme Court is required.

The court wanted the bank’s attorney who came to the hearing visibly unprepared, to write him a brief. She said it would be easier for her to amend the complaint. Eventually, the court took the case under advisement, giving her a week to submit a memorandum as to why the homeowner’s motion to dismiss should be denied. Please come back in a couple of weeks to see the outcome. Very interesting issues are involved here.

Homeowner gets motion to subsitute party plaintiff denied

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I wrote earlier that when banks file motions to substitute party plaintiff, judges routinely grant them, whether or not there are objections by the homeowner or their attorney. I even asserted that granting such motions is what the bench book probably suggests. But I finally came across a situation where the homeowner’s arguments prevailed; and the bank’s motion was dismissed.

Since August 2009 when the complaint was filed, JPMorgan Chase claimed to be the legal or equitable owner and holder of the loan documents and entitled to enforce them. In 2012 JPMorgan Chase set the case for summary judgment hearing. After that the attorneys filed motion to substitute JPMorgan Chase for Wells Fargo as trustee of some securitized trust.

The homeowner has rightly stated that substitution is essentially amending the complaint, and that plaintiff should not have waited until the pleadings had closed. The homeowner quoted State ex. rel. Hawkins v. Board of Control, 53 So. 2d 116 (Fla. 1951) (Facts stated in motions are not evidence of the facts related therein. Those facts must be proven before the motion can be granted).

Trial judges cannot rely upon unsworn statements (by attorneys) as the basis for making factual determinations. Leon Shaffer Golnick Advertising Inc. v. Cedar, 423 So. 2d 1015, 1017 Fla. 4th DCA 1982).

In the case at hand plaintiff has provided no admissible evidence of any transfer of any interest to any other party. Motion to substitute party plaintiff was denied.

Summary judgment is an abuse of discretion when discovery is pending

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There is yet another summary judgment reversed recently for abuse of discretion by the lower court. This time by the First District Court of Appeal in Harvey Covington v. W M C Mortgage Corp.

http://scholar.google.com/scholar_case?q=Harvey+Covington&hl=en&as_sdt=4,10&case=8854021147868611164&scilh=0

Harvey Covington filed a motion to continue summary judgment hearing in order to conduct discovery on the affidavits submitted by WMC. The trial court made an error and abused its discretion by denying the motion upon finding that it sought “information that borders on the irrelevant and in light of the age of this case”.

The Court of Appeal held that Harvey Covington may have been able to successfully challenge the affidavits as the only evidence of the amount due and owing on hearsay grounds, had it been allowed time to complete discovery and had the case then proceeded. The court quoted Mazine v.
M & I Bank, 67 So. 3d 1129 (Fla. 1st DCA 2011). With discovery pending and such essential questions unresolved, the trial court abused its discretion in denying the motion to continue.

“Generally, it is an abuse of discretion for a trial court to grant summary judgment where the opposing party has not had an opportunity to complete discovery.” Crowell v. Kaufmann, 845 So. 2d 325, 327 (Fla. 2d DCA 2003).

Last minute efforts to delay trial that did not work

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I happen to know a lot of attorneys. None of them will ever tell you he or she can guarantee winning your case. And it’s understandable. It’s a lot of responsibility. A guarantee means they will have to give you your money back, or maybe even pay you, if they loose. No way.

But it’s also important to know that attorneys have different opinions on foreclosure cases. I heard some tell me honestly that foreclosure cases are not winnable: you signed on the dotted line, you have to pay, and it does not matter whom you owe to. I heard others say: you have to lower your expectations; I can certainly delay your case quite a bit, but you have to pay me $200-$500 a month for each month while the case remains active, if that’s what you want.

And that brings us to the most important question: what do you really want – win the case or just delay it. While winning and delaying strategies do overlap sometimes, but there are crucial differences between them as they lead to totally different final results.

Here’s a transcript of a pre-trial conference that illustrates my perspective on this. Essentially, the pre-trial conference is where the judge asks the attorneys (parties) if they are ready to proceed to trial, and to flush out any remaining issues.

http://mattweidnerlaw.com/blog/wp-content/uploads/2012/05/Dozark+-+Pre-Trial+Conference.pdf

It turned out, after the case was set for trial the homeowner’s attorney filed 9 motions that could prevent the trial from taking place. Among them was a motion for judgment on the pleadings. I wrote about this kind of a motion before. Another attorney successfully argued the motion before the court, and that case was dismissed. In this case, however, it did not work.

While the concept was right, the execution was not. In that other case I wrote about, the original complaint stated the note was lost, but later it was found and filed without amending pleadings, and judgment on the pleadings was proper. In this case the situation was kind of similar: the original complaint had a note without endorsement, but when the original note was filed it had an endorsement and pleadings were not amended.

But the bank’s attorney told the judge the original note with endorsement was filed in 2009, and the homeowner’s attorney did not raise any objections for 3 years, until the case was set for trial. In fact, Rule 1.140(c), Florida Rules of Civil Procedure, specifically states the motion must be filed “within such time as not to delay the trial”. The motion was denied.

Motion to amend answer on the eve of trial was denied too. Motion to compel production of the pooling and servicing agreement: the judge found it was not the basis for not proceeding to trial. In fact, the judge quoted federal and out-of –state opinions that borrowers do not have standing to challenge the agreement. As to other discovery requests, the bank’s attorney did mention the fact they were served in the last minute, but he nevertheless had the responses with him and handed them over to the homeowner’s attorney. The case proceeded to trial, and as I was saying time and again trials are tough to win.

There was a handsome delay in the case, but to win the case you have to fight it, not delay it.

No 1099 for another homeowner yet

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The first round of the homeowner’s fight with GMAC started in 2009 and ended in 2010 in favor of the homeowner. GMAC, who never owned the loan, pretended to own it and had the now famous document robosigning officer Jeffrey Stephan execute an assignment of mortgage in favor of his employer from MERS, along with thousands of other assignments like this. The homeowner made a big noise about it, and GMAC eventually dropped the case voluntarily to get out of trouble.

But 6 short months later, they hired new attorneys who started a new case as if nothing happened. At least they wished to believe that nothing happened. They paid billions of dollars to the Government for robosigning practices, and yet they started a new case and recorded a new assignment of mortgage from MERS, executed by another, just less famous robosigner from the same team, without even canceling the previously recorded assignment. So, technically MERS, even if it existed and was authorized to assign the mortgage, had absolutely nothing left to assign: the mortgage was already assigned.

The note, on the other hand, was made payable to a company other than GMAC and had no endorsement, either to GMAC, or in blank, neither the first time around, nor the second time. Because raising the issue of endorsement is considered improper in a motion to dismiss, the homeowner’s motion raised a single argument, which is always a winner: failure to properly verify complaint. The homeowner noticed the new attorneys for GMAC were using a copy of the same verification on a separate piece of paper from case to case by just inserting the new case number each time. More importantly, “the verification” did not state the relationship of the verifier to the plaintiff.

The homeowner’s motion to dismiss was granted, and GMAC had to amend their complaint. They attempted to turn their temporary setback to their advantage: 16 months after the original complaint was filed with no endorsement attached, their amended complaint has an endorsement appearing to be fake.

The homeowner has filed a motion to dismiss amended complaint with 3 major arguments:
1) The note attached to the original Complaint was made payable to a party other than the Plaintiff, lacked any endorsement and evidenced lack of Plaintiff’s standing in this matter. If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement. Riggs v. Aurora Loan Services, LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010).

2) The note attached to the Amended Complaint (sixteen months later) contains a blank endorsement, which constitutes a prohibited departure in
pleading. See Mazza v. Santoni, 855 So. 2d 710 (Fla. 4th DCA 2003). See also, Rule 1.190, Fla. R. Civ. P.:

(c) “Relation Back of Amendments. When the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment should relate back to the date of the original pleading”.

3)The amended note also constitutes an admission that Plaintiff did not have standing at the commencement of this action. See Progressive Express InsuranceCompany v. McGrath Community Chiropractic, 913 So. 2d 1281 (Fla. 2nd DCA 2005).

Time will show what the outcome will be. Please come back later to check.

A lucky homeowner gets a 1099 from the bank

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Foreclosures have never been easy to fight. Don’t forget: you’re fighting against the rich and powerful banks, and they fight so hard against you because there’s so much money involved. Money makes shareholders happy, and the banks’ management gets their bonuses, retreats in Hawaii, and golden parachutes. But if you think about it, the homeowner has shareholders too: family, children, parents, grandchildren and grandparents. Still, not as numerous as the banks have. And that’s why it is so sweet to win.

The sweetest of all I’ve ever seen was when a friend of mine received a 1099 form from the bank. His attorney actually lost the foreclosure case, but then unexpectedly the bank sent him a release of mortgage and a 1099: in real estate somebody’s loss is always somebody’s gain, and the gain is taxable. When you have income, of course. Banks’ attorneys have come up with a nice language for situations like this: our client has reviewed its equity position in this property, and decided not to pursue foreclosure any further!!!
There’s certainly a great element of luck involved in this. My friend would have never gotten anything like it, if he asked for it himself. It has to be spontaneous. But it does happen once in a while.

Standing of a servicer

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As recently as April 4, 2012 the 4th District Court of Appeal reversed the trial court’s non-final order because the trust, current owner and holder of the loan documents, did not properly plead standing.

http://www.4dca.org/opinions/April%202012/04-04-12/4D11-3151.op.pdf

The court held that “in securitization cases, a servicer may be considered a party in interest to commence legal action as long as the trustee joins or ratifies its action” (quoting In re Rosenberg, 414 B.R. 828, 842 (Bankr. S.D. Fla. 2009). But there should be an affidavit of the trustee to that effect. Pooling and servicing agreement is good too as additional evidence (quoting CWCapital Asset Management, LLC v. Chicago Properties, LLC, 610 F.3d 497 (7th Cir. 2010).

In the instant case that is being reversed, however, the servicer did not file any evidence, affidavits or other documents, supporting its allegation that it was authorized to prosecute the action on behalf of the trust. The complaint was verified by the servicer itself, not by the trust. Thus, the servicer relied on nothing more than its own allegations and affidavit to support its argument that it has standing to sue on the trust’s behalf. The Court of Appeal found it to be insufficient evidence to prove that it is authorized to sue on the trust’s behalf.

All the right arguments by the homeowner’s attorney that were rejected at trial

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I’ve seen trials won quickly and easily, and I wrote about them. I’ve seen a trial where the bank’s witness was disqualified, as she was not the custodian of records. I’ve seen a trial where the bank’s witness from Bank of America wasn’t allowed to testify about the business records of Countrywide. And I’ve seen multiple trials won because the bank’s witness lists were late, or non-specific, and did not comply with court orders setting cases for trial. The reason why the witness list should be timely and specific is to give the homeowner an opportunity to depose them ahead of trial.
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Homeowner’s arguments that did not prevent summary judgment

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There were a couple of interesting moments at the recent summary judgment hearings. A homeowner, accompanied by his wife, explained to the judge his wife was incapacitated and told the judge about the difficulties he’s been encountering with the bank in trying to obtain a loan modification, but that the matter was close to being resolved. He also informed the judge that his attorney has dropped him at the 11th hour after he had paid him as much as $3,500.00.
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Third homeowner hits the bank with a toughest lawsuit of all – what’s going on?

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What’s going on? The third homeowner hits a bank with a lawsuit, and this one is the toughest and most extensive of all of them. In addition to suing the bank and its subsidiary, a mortgage company, the homeowner is also suing a couple of real estate brokers who were instrumental in the overall transaction.

The homeowner claims the real estate brokers referred him to the bank and the mortgage company for the purpose of providing him with a mortgage to purchase certain property. The defendants, including those who facilitated the purchase of the property, “fraudulently increased and grossly overstated his income and qualified him for a higher loan than his verifiable income and assets would support”. As such, they listed accounts with Ameritrade that he did not have, while in fact he informed them his whole income was only $1,026.00 a month from social security disability based on manic-depressive bi-polar disorder.
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