Bank of Am., N.A. v. Graybush, 4D17-1256

• Decision Date: 15 August 2018
• Docket Number: No. 4D17-1256,4D17-1256
• Citation: 253 So.3d 1188
• Parties: BANK OF AMERICA, N.A., Appellant, v. Kenneth H. GRAYBUSH a/k/a Kenneth Howard Graybush and Robin B. Graybush a/k/a Robin Bean Graybush, Appellees.
• Court: Florida District Court of Appeals

253 So.3d 1188

BANK OF AMERICA, N.A., Appellant,

v.Kenneth H. GRAYBUSH a/k/a Kenneth Howard Graybush and Robin B. Graybush a/k/a Robin Bean Graybush, Appellees.

No. 4D17-1256

District Court of Appeal of Florida, Fourth District.

August 15, 2018

Mary J. Walter of Liebler Gonzalez & Portuondo, Miami, for appellant.

Kendrick Almaguer and Thomas Eross Jr. of The Ticktin Law Group, P.L.L.C., Deerfield, Beach, for appellees.

Forst, J.

Appellant Bank of America, N.A. ("the Bank") appeals a final judgment in favor of appellees Kenneth and Robin Graybush ("the Borrowers"). The trial court found that although the Bank had proven the elements of foreclosure, the action was time-barred by the applicable statute of limitations; accordingly, the trial court granted the Borrowers' motion for involuntary dismissal. For the reasons explained below, we reverse and remand for the trial court to enter final judgment in favor of the Bank.

Background

On July 16, 2007, the Borrowers executed a promissory note in the amount of $148,500, secured by a mortgage on real property. Under the terms of the note, the Borrowers would make monthly installment payments to satisfy the loan. The designated maturity date of the note, for which all payments were due, was August 1, 2027. The Borrowers agreed in the note, that "[i]f on AUGUST 01, 2027, I still owe amounts under this Note, I will pay those amounts in full on that date, which is called the ‘Maturity Date.’ "

Paragraph twenty-two of the mortgage had an optional acceleration clause providing that should the Borrowers default on any monthly payment, the Bank could elect to provide them with a notice of acceleration. Further, "[i]f the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclose this Security Instrument by judicial proceeding." (Emphasis added).

Paragraph nineteen of the mortgage provided that, after acceleration, the Borrowers could reinstate the mortgage by curing (i.e., paying everything owed under the terms of the note and mortgage) up until entry of a judgment enforcing the mortgage. Upon reinstatement of the mortgage, the mortgage "and obligations secured hereby [would] remain effective as if no acceleration had occurred." The Borrowers also agreed that "[e]ven if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time."

Beginning on October 1, 2008, the Borrowers stopped making installment payments on their mortgage. The Bank responded the following month with a "Notice of Intent to Accelerate," advising them of the default and stating in part:

If the default is not cured on or before December 17, 2008, the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time.

The Borrowers subsequently did not cure the default, and on September 29, 2009, the Bank filed a complaint to foreclose and for the first time "declare[d] the full amount payable under the Note and Mortgage to be due," pursuant to the mortgage's optional acceleration clause. The complaint alleged that the Borrowers defaulted on the note and mortgage by failing to pay the "October 1, 2008 payment and all payments due thereafter." For reasons not relevant to this appeal, the Bank voluntarily dismissed the complaint without prejudice on July 23, 2013.

On September 16, 2014, the Bank filed a second complaint for foreclosure. The complaint alleged the same October 1, 2008 default and that "all subsequent payments have not been made."

At trial, the Bank's witness, an employee who worked for almost nine years as a "consumer resolution team representative," testified that the Borrowers defaulted on October 1, 2008 and that the loan was still in default up to that point. The Bank introduced a payment history evidencing the missed payments. The Borrowers declined to present any evidence, and instead only raised a statute of limitations defense. At the conclusion of the Bank's case-in-chief, the Borrowers moved for involuntary dismissal on that basis.

The trial court found that the Bank proved its case by a preponderance of the evidence. However, it held that "the statute of limitations commenced to run when [the Bank] exercised the acceleration option of the Mortgage and notified [the Borrowers] of this exercise by its Notice of Intent to Accelerate mailed on November 17, 2008, unequivocally and clearly accelerating the debt should payments not be received on or before December 17, 2008." The court concluded that, based on the December 17, 2008 date, the complaint filed on September 16, 2014 was barred by the five-year statute of limitations set forth in section 95.11(2)(c), Florida Statutes (2017). As a result, the court dismissed the Bank's case without prejudice, and entered final judgment in favor of the Borrowers.

Analysis

"Generally, ‘the issue of whether [a] claim is barred by the statute of limitations is a question of law subject to de novo review.’ " Access Ins. Planners, Inc. v. Gee , 175 So.3d 921, 924 (Fla. 4th DCA 2015) (alteration in original) (quoting Beltran v. Vincent P. Miraglia, M.D., P.A. , 125 So. 3d 855, 859 (Fla. 4th DCA 2013) ).

The questions presented on appeal are whether the Bank's second foreclosure complaint was barred by the relevant statute of limitations, and if not, whether the Bank was entitled to all sums due under the note and mortgage. In Florida, the statute of limitations to file a foreclosure action is five years from the date of default. § 95.11(2)(c), Fla. Stat. (2017).

As a preliminary matter, we note that because we are dealing with an optional acceleration clause in the mortgage, acceleration "is not automatic or self-executing, but requires the lender to exercise this option and to give notice to the borrowers that it has done so." Snow v. Wells Fargo Bank, N.A. , 156 So.3d 538, 542 (Fla. 3d DCA 2015) ; see also Reano v. U.S. Bank Nat'l Ass'n , 191 So.3d 959, 961 (Fla. 4th DCA 2016).

On appeal, both parties correctly acknowledge that the trial court erred in picking December 17, 2008 as the date of acceleration. The Notice of Intent to Accelerate did not constitute an acceleration despite its language that the note "will be accelerated" if the Borrowers failed to cure by that date. The Bank retained discretion to accelerate at a later date, as the full amount of principal due was not stated—only the amount due for October and any additional regular payments and charges that came due before December 17, 2008. See Snow , 156 So.3d at 542 (holding that the portion of a notice letter that stated "[i]f you do not pay the full amount of the default, we shall accelerate the entire sum of both principal and interest due and payable ...," did not "convert[ ] the optional acceleration into a prospective, self-executing acceleration which was automatically triggered upon the failure of the [borrowers] to cure the default.").

Just as in Snow , the letter here did not indicate that the Bank was exercising its option to accelerate, but only that the Bank intended to accelerate at some point on or after December 17, 2008 should the Borrowers fail to cure. Id. at 542 ; see also Pino v. Deutsche Bank Nat'l Tr. Co. , 201 So.3d 128, 128 (Fla. 3d DCA 2015). The Bank did not actually accelerate the note until it filed the first complaint and declared all sums immediately due. Typically, when a mortgage contains an optional acceleration clause, "[t]he filing of suit for foreclosure amounts to exercise of the option of the mortgagee to declare the whole of the principal sum and interest secured by the mortgage due and payable."

Campbell v. Werner , 232 So.2d 252, 254 n.1 (Fla. 3d DCA 1970) ; see also Reano , 191 So.3d at 961 (similarly explaining that when a mortgage contains an optional acceleration clause, "[t]he filing of a lawsuit constitutes notice of acceleration.").

Admittedly, the Bank voluntarily dismissed the first complaint, but that had no effect on the Bank's ability to file a second complaint and re-accelerate the mortgage, given that the dismissal was without prejudice, and the Borrowers continued to be in default. "[A]fter the dismissal, the parties are simply back in the same contractual relationship as before, where the residential mortgage remained an installment loan, and the acceleration of the mortgage declared in the unsuccessful foreclosure action is revoked." Bartram v. U.S. Bank Nat'l Ass'n , 211 So.3d 1009, 1019 (Fla. 2016). "[A] dismissal without prejudice would allow a mortgagee to bring another foreclosure action premised on the same default." Id. at 1020.

"A voluntary dismissal [without prejudice] is not an adjudication on the merits and therefore will not support a claim of res judicata. " Evergrene Partners, Inc. v. Citibank, N.A. , 143 So.3d 954, 956 (Fla. 4th DCA 2014). Accordingly, "after the dismissal, the parties are simply placed back in the same contractual relationship as before, where the residential mortgage remained an installment loan, and the acceleration of the mortgage declared in the unsuccessful foreclosure action is revoked." Bartram , 211 So.3d at 1019.

Even though the Borrowers concede error as to the trial court's finding that the date of acceleration was December 17, 2008, they argue that the trial court's final judgment should be affirmed on alternative grounds, based on the Bank's allegation in its second foreclosure action that the Borrowers defaulted on October 1, 2008. The Borrowers point out that this date is more than five years from the date of filing the second complaint—September 16, 2014—and so the complaint should still be dismissed as barred by the statute of limitations. To support their argument, the Borrowers cite to ...