Derouin v. Universal Am. Mortg. Co.

• Decision Date: 22 August 2018
• Docket Number: Case No. 2D17-1002
• Citation: 254 So.3d 595
• Parties: Richard J. DEROUIN and Kim E. Derouin, Appellants, v. UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC, a Florida limited liability company, Appellee.
• Court: Florida District Court of Appeals

254 So.3d 595

Richard J. DEROUIN and Kim E. Derouin, Appellants,

v.UNIVERSAL AMERICAN MORTGAGE COMPANY, LLC, a Florida limited liability company, Appellee.

Case No. 2D17-1002

District Court of Appeal of Florida, Second District.

Opinion filed August 22, 2018.

Dineen Pashoukos Wasylik and Jared M. Krukar of DPW Legal, Tampa, for Appellants.

Laura H. Howard and Stanford R. Solomon of The Solomon Law Group, P.A., Tampa, for Appellee.

LaROSE, Chief Judge.

Richard and Kim Derouin appeal a final foreclosure judgment entered in favor of Universal American Mortgage Company, LLC. We have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(A). The Derouins contend that Universal failed to engage in the face-to-face meeting required by 24 C.F.R. § 203.604 (2012) prior to filing the foreclosure lawsuit. Critical to our resolution of this matter, they maintain that the trial court erred in finding that they waived Universal's compliance with the federal regulations. Because the record before us does not show waiver, we reverse and remand for entry of an order of involuntary dismissal.

Background

Universal loaned money to the Derouins to buy a home. The loan, insured by the Federal Housing Administration, was memorialized by a note and secured by a mortgage. The note provided that, if the Derouins defaulted, Universal "may, except as limited by regulations of the Secretary [of Housing and Urban Development] in the case of payment defaults, require immediate payment in full of the principal balance remaining due and all accrued interest .... This Note does not authorize acceleration when not permitted by HUD regulations." (Emphasis added).

The HUD regulations upon which the Derouins rely provide, in relevant part, as follows: "The mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid." 24 C.F.R. § 203.604(b).¹ The regulations also cabin the mortgagee's ability to foreclose until the face-to-face interview is conducted.

See 24 C.F.R. § 203.500 ("This subpart identifies servicing practices of lending institutions that HUD considers acceptable for mortgages insured by HUD.... It is the intent of the Department that no mortgagee shall commence foreclosure or acquire title to a property until the requirements of this subpart have been followed.").

The regulations establish several exceptions to the face-to-face meeting requirement, two of which apply here. First, a mortgagee may be excused from conducting the interview when "[t]he mortgagor has clearly indicated that he will not cooperate in the interview." 24 C.F.R. § 203.604(c)(3). Second, a meeting is unnecessary when "[a] reasonable effort to arrange a meeting is unsuccessful." 24 C.F.R. § 203.604(c)(5). "A reasonable effort to arrange a face-to-face meeting with the mortgagor" includes "at a minimum ... one letter sent to the mortgagor certified by the Postal Service as having been dispatched" and "at least one trip to see the mortgagor at the mortgaged property." 24 C.F.R. § 203.604(d).

Universal sued the Derouins after they defaulted on their loan payments. Universal alleged that "[a]ll conditions precedent to commencement and maintenance of this action have been performed, satisfied[,] or otherwise discharged." The Derouins answered the complaint, denied the substantive allegations, and asserted several affirmative defenses. Universal replied to the affirmative defenses.

With the trial court's permission, the Derouins filed a second amended answer. See Thompson v. Jared Kane Co., Inc., 872 So.2d 356, 360 (Fla. 2d DCA 2004) ("The Florida Rules of Civil Procedure reflect a clear policy that, absent exceptional circumstances, requests for leave to amend pleadings should be granted."). In that pleading, the Derouins specifically denied that Universal satisfied all conditions precedent to filing suit. Specifically, they alleged that Universal had failed to conduct, or otherwise attempt to conduct, a face-to-face meeting within ninety days of default. The Derouins also raised a corresponding affirmative defense: Universal "[f]ailed to make face-to-face contact or failed to make reasonable attempts to contact Defendants face-to-face as required by 24 C.F.R. § 203.604." Universal did not reply to this new defense.

Following trial, the trial court granted the Derouins' motion for involuntary dismissal based on an evidentiary issue not before us. Universal moved for rehearing. The Derouins opposed that motion, arguing that there were several alternative bases supporting dismissal, including Universal's failure to comply with HUD's face-to-face meeting requirement.

The trial court granted Universal's rehearing motion, finding that the Derouins had "waived their right to seek compliance with 24 C.F.R. § 203.604." The trial court relied on Ms. Derouin's trial testimony "that shortly after the default, she received a telephone call from the Plaintiff or Plaintiff's servicer and that she no longer wished to deal directly with [them]." The trial court observed that the Derouins "were not prejudiced by the lack of a [face-to-face] meeting," and that Universal could not reasonably be expected to engage in such a meeting "[a]fter Ms. Derouin communicated to [Universal] that she was not to be contacted directly." The trial court awarded Universal a final judgment of foreclosure.

Standards of Review

The record compels us to employ several standards of review. To the extent that we review the trial court's interpretation of the note, we utilize de novo review. See Mgmt. Comput. Controls, Inc. v. Charles Perry Constr., Inc., 743 So.2d 627, 630 (Fla. 1st DCA 1999) ("[A] decision interpreting a contract presents an issue of law that is reviewable by the de novo standard of review."). "However, the trial court's order in this case is based–at least in part–on findings of fact and legal conclusions regarding an alleged [waiver]. We defer to the [trial] court's findings of fact when they are based on competent, substantial evidence." U.S. Bank Nat'l Ass'n v. Rios, 166 So.3d 202, 207 (Fla. 2d DCA 2015). Yet, we are not obligated "to disregard record evidence that disproves the lower court's findings or that reveals its ruling to be an abuse of discretion." In re Doe, 932 So.2d 278, 284 (Fla. 2d DCA 2005).

Because the trial court's grant of rehearing, which vacated the prior dismissal order and resulted in entry of a final judgment, was not based upon competent substantial evidence, we reverse. Moreover, because our de novo review of the note demonstrates that involuntary dismissal was appropriate, we order such relief on remand. See Simpson v. State, 33 So.3d 776, 778 (Fla. 4th DCA 2010) ("The standard of review of a trial court's denial of a motion to dismiss is de novo."); Perez v. Perez, 973 So.2d 1227, 1231 (Fla. 4th DCA 2008) ("An involuntary dismissal is properly entered only where the evidence considered in the light most favorable to the non-moving party fails to establish a prima facie case."); Robinson v. Wright, 425 So.2d 589, 589 (Fla. 3d DCA 1982) ("Where no evidence [i]s presented in a non-jury trial to establish a prima facie case, it [i]s proper to grant defendant's motion ... for involuntary dismissal ....").

Analysis

I. 24 C.F.R. § 203.604 as a condition precedent

The parties tacitly agree that the face-to-face meeting requirement is a condition precedent to filing a foreclosure lawsuit. For purposes of this appeal, we assume the same. See, e.g., ARC HUD I, LLC v. Ebbert, 212 So.3d 513, 515-16 (Fla. 2d DCA 2017) (reversing an award of summary judgment because the mortgagee created an issue of material fact as to whether an exception applied to the "condition precedent" of a face-to-face interview); White v. Planet Home Lending, LLC, 234 So.3d 802, 803 n.1 (Fla. 4th DCA 2018) ("Absent evidence that Appellee engaged in a face-to-face interview with Appellant before the former filed its foreclosure complaint or that any exception to the interview requirement applied, it would be appropriate to enter an involuntary dismissal of Appellee's foreclosure complaint." (citing McIntosh v. Wells Fargo Bank, N.A., 226 So.3d 377, 379 (Fla. 5th DCA 2017) ) ); Harris v. U.S. Bank Nat'l Ass'n, 223 So.3d 1030, 1032 (Fla. 1st DCA 2017) (holding that compliance with face-to-face meeting requirement was a condition precedent to initiating foreclosure action); Palma v. JPMorgan Chase Bank, Nat'l Ass'n, 208 So.3d 771, 773, 775 (Fla. 5th DCA 2016) (holding that mortgage language providing, in the event of a default, the debt could be accelerated "except as limited by regulations of the Secretary ... of Housing and Urban Development" incorporated the federal regulations, including the face-to-face interview requirement, as a condition precedent to filing suit); cf. Laws v. Wells Fargo Bank, N.A., 159 So.3d 918, 919 (Fla. 1st DCA 2015) (reversing mortgagee's award of summary judgment because mortgagor was "entitled to raise failure to comply with [HUD regulations] as a valid defense to foreclosure").

Seemingly, the case law is unsettled as to whether noncompliance with the regulations must be raised as an affirmative defense or as a specific denial in an answer. Compare Palma, 208 So.3d at 774 ("We find that the trial court erred by requiring Appellant to raise Bank's noncompliance with section 203.604 as an affirmative defense."), with Harris, 223 So.3d at 1033 ("A ‘defending party's assertion that a plaintiff has failed to satisfy conditions precedent necessary to trigger contractual duties under an existing agreement is generally viewed as an affirmative defense, for which the defensive pleader has the burden of pleading and persuasion.’ " (quoting Custer Med. Ctr. v. United Auto. Ins. Co., 62 So.3d 1086, 1096 (Fla. 2010) ) ). But see Chrzuszcz v. Wells Fargo Bank, N.A., 250 So.3d 766, 767, 2018 WL 3151206 (Fla. 1st DCA June 28, 2018) ("Here, as in Palma, where the Bank asserted in the...