Citibank, N.A. v. Olsak

• Decision Date: 30 November 2016
• Docket Number: No. 3D15–1032.,3D15–1032.
• Citation: 208 So.3d 227
• Parties: CITIBANK, N.A., etc., Appellant, v. Martin and Jitka OLSAK, Appellees.
• Court: Florida District Court of Appeals

208 So.3d 227

CITIBANK, N.A., etc., Appellant,

v.Martin and Jitka OLSAK, Appellees.

No. 3D15–1032.

District Court of Appeal of Florida, Third District.

Nov. 30, 2016.

Rehearing Denied Dec. 21, 2016.

Carlton Fields Jorden Burt, P.A., and Michael K. Winston, Dean A. Morande, and Alana Zorrilla–Gaston, West Palm Beach, for appellant.

W.J. Barnes, P.A., and Jeff Barnes, Boca Raton, for appellees.

Before SUAREZ, C.J., and SHEPHERD and SCALES, JJ.

SCALES, J.

Appellant, plaintiff below, Citibank, N.A., as trustee for the BSARM 2007–2 trust (the "Trust"), appeals a final judgment involuntarily dismissing the Trust's foreclosure complaint post-trial. The trial court entered final judgment against the Trust based exclusively on Appellees' expert witness who testified at trial that the Trust was not, and never had been, the holder of the subject note. We reverse because the trial court impermissibly relied upon the expert's legal conclusions rather than competent, substantial evidence.

I. Facts

In September of 2006, the now defunct Orion Bank loaned Appellee Martin Olsak $540,000. Orion Bank's loan was memorialized with a promissory note (the "Olsak Note"), and secured with a mortgage (the "Olsak Mortgage") encumbering Olsak's real property in Key West, Florida. After Olsak defaulted on the note and mortgage by failing to make a required installment payment, the Trust—which had allegedly acquired the Olsak Note and Mortgage—filed a foreclosure action in Monroe County Circuit Court in June of 2009.

Prior to trial, the Trust filed with the Court the original Olsak Note payable to Orion Bank. The Olsak Note was endorsed by the loan's servicer, Wells Fargo, as Orion Bank's attorney-in-fact, and then endorsed in blank by Wells Fargo. The Trust introduced into evidence a September 2006 mortgage assignment showing that the Olsak Mortgage and Olsak Note were assigned by Orion Bank to Wells Fargo on the same day the loan was originated. In addition, the Trust introduced into evidence a Wells Fargo "screen shot" purportedly showing that the loan was placed into the Trust on June 28, 2007.

Olsak called one witness, Richard Kahn, a mortgage foreclosure fraud investigator and securitization auditor. Over the Trust's objections, Kahn, a non-lawyer whom the trial court treated as an expert witness, gave opinion testimony that the Trust documents did not allow for the Trust to acquire a note, like the Olsak Note, that had been endorsed in blank.

Kahn also testified that the Olsak Note endorsements violated IRS provisions related to real estate mortgage investment conduits ("REMICs") such as the Trust. While Kahn was unable to identify who held the Olsak Note, he testified, in conclusory fashion, that the Trust was not the holder of the Olsak Note.

After allowing for post-trial submittals by the parties, and relying exclusively on Kahn's testimony, the trial court entered the final judgment on appeal concluding that the Trust "[n]ever acquired any interest in either the Note or the mortgage" and, therefore, never acquired standing to institute the action. Citibank timely appealed.

II. Standard of Review

Generally, the determination of whether a plaintiff has standing is a legal issue subject to de novo appellate review. Reynolds v. Nationstar Loan Servs., LLC, 190 So.3d 219, 221 (Fla. 4th DCA 2016). To the extent that the trial court's standing determination involves factual findings, we uphold such findings only if supported by competent, substantial evidence. Verneret v. Foreclosure Advisors, LLC, 45 So.3d 889, 891 (Fla. 3d DCA 2010).

III. Analysis

To have standing, a plaintiff who is not the promissory note's original payee must have possession of the note at the inception of the foreclosure case. This plaintiff also must provide the trial court with either an assignment in favor of the plaintiff or a note that bears either an endorsement in blank or a special endorsement in favor of the plaintiff. See McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170, 173 (Fla. 4th DCA 2012) ; see also § 673.3011, Fla. Stat. (2016) (stating that a "person entitled to enforce" an instrument includes "[t]he holder of the instrument"); Wells Fargo Bank, N.A. v. Morcom, 125 So.3d 320, 321–22 (Fla. 5th DCA 2013). While the Trust had possession of the Olsak Note bearing a blank endorsement, the trial court nonetheless determined that the Trust never acquired any interest in the Olsak Note. The record reflects that the trial court's conclusion was based exclusively on Kahn's testimony.

Specifically, Kahn opined that: (i) the terms of the Trust documents required all notes held by the Trust to contain specific endorsement language not contained on the endorsed Olsak Note; (ii) the language of the 2006 mortgage assignment did not comport with the requirements of the Trust documents; (iii) Wells Fargo's purported endorsement of the Olsak Note as attorney-in-fact for Orion Bank was invalid because Kahn had not located a recorded power of attorney document in which Orion Bank had appointed Wells Fargo as its attorney-in-fact; and (iv) the alleged infirmities regarding the Olsak Note's endorsements and 2006 mortgage assignment violated IRS rules governing REMICs.

At the outset, it bears noting that witnesses,...