Espinoza v. Countrywide Home Loans Servicing, L.P.
| Decision Date | 05 August 2014 |
| Docket Number | CASE NO. 14-20756-CIV-ALTONAGA/O'Sullivan |
| Court | U.S. District Court — Southern District of Florida |
| Parties | JORGE E. ESPINOZA, et al., Plaintiffs, v. COUNTRYWIDE HOME LOANS SERVICING, L.P., et al., Defendants. |
THIS CAUSE came before the Court on Defendants, Bank of America, N.A. ("BOA"), Mortgage Electronic Registration Systems, Inc., and Federal National Mortgage Association's (collectively, "Defendants[']") Motion to Dismiss Second Amended Complaint and Strike Irrelevant/Inflammatory Allegations . . . [ECF No. 57], filed June 19, 2014. Plaintiffs, Jorge E. Espinoza and Silvia Espinoza (collectively, "Plaintiffs"), filed their Response . . . ("Response") [ECF No. 70] on July 7, 2014. Defendants filed their Reply . . . ("Reply") [ECF No. 75] on July 17, 2014. The parties presented oral argument on the Motion at a hearing [ECF No. 77] on July 25, 2014. The Court has carefully considered the parties' written submissions, oral arguments, and applicable law.
In January 2014, Plaintiffs filed a Complaint ("Complaint") (see [ECF No. 1]), in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida. On February 28, 2014, Defendants removed the action to this Court (see id.) and thereafter filed ananswer, affirmative defenses, and BOA's verified counterclaim (see [ECF No. 8]). Plaintiffs filed a First Amended Complaint [ECF No. 38], and BOA filed a Verified Amended Counterclaim [ECF No. 39]; thereafter, Defendants filed a Motion to Dismiss . . . ("First Motion to Dismiss") [ECF No. 44], which was denied as moot (see [ECF No. 51]). Plaintiffs filed a Second Amended Complaint ("SAC") [ECF No. 56] on June 10, 2014.
This matter arises out of a note ("Note") and mortgage ("Mortgage") on property in Miami-Dade County. (See SAC ¶ 4). Plaintiffs executed the Note and Mortgage on August 2, 2005, agreeing to repay the debt in monthly installments by September 1, 2035. (See id. ¶¶ 52-53). The Mortgage was subsequently assigned to Countrywide Home Mortgages, LLC ("Countrywide"). .2 Plaintiffs defaulted on payments of the Note and Mortgage on August 1, 2008. (See id. ¶ 56). Pursuant to an acceleration clause in the Note (see id. ¶ 57), Countrywide accelerated the Note by sending a letter to Plaintiffs stating if the default was not cured by October 16, 2008, all remaining payments of the Mortgage would be accelerated (see id. ¶ 60).
Plaintiffs did not cure the deficiency by the deadline, triggering Countrywide's "election to accelerate on that date." (Id. ¶ 61). Countrywide filed a foreclosure complaint on March 26, 2009, which was later dismissed without prejudice. (See id. ¶ 63 (citing id., Ex. E)). The Note and Mortgage do not "provide[] the holder/mortgagee any right to reinstate or 'decelerate' the Note and Mortgage once it has elected to accelerate the installment payments into a lump sum immediately due." (Id. ¶ 58 (alteration added)). Thus, Plaintiffs allege the dismissal ofthe suit had no effect on the previous election to accelerate the Note and Mortgage. (See id. ¶ 64).
Countrywide and its successors and assignees did not reinitiate a foreclosure action within a five-year period following October 16, 2008 (see id. ¶¶ 66-67), and afterward Defendants "continued to seek payments and report Plaintiffs to credit agencies after October 16, 2013, even though the Note and Mortgage are no longer enforceable due to the expiration of the limitations period." (Id. ¶ 68). "The Note and Mortgage remain unsatisfied of record and constitute an invalid cloud on Plaintiffs' title to the subject property." (Id. ¶ 69). "Plaintiffs have remained in default since August 1, 2008[,] and have not reinstated the Note and/or Mortgage or cured the default to otherwise make the Note and/or Mortgage current." (Id. ¶ 124 (alteration added)).
The SAC contains seven counts: Count I, seeking a declaratory judgment the Note is unenforceable due to the expiration of the limitations period; Count II, a claim for injunctive relief to prevent attempts to collect on the Note; Count III, seeking a declaratory judgment the Mortgage cannot be foreclosed on due to the expiration of the limitations period; Count IV, a claim for injunctive relief to prevent attempts to collect on or reinstate the Mortgage; Count V, seeking to quiet title to the subject property; Count VI, seeking a declaratory judgment defaulted payments more than five years old cannot be collected and Defendants' collection and reporting practices are improper; and Count VII, a claim for injunctive relief to prevent Defendants from continuing to report or trying to collect defaulted payments more than five years old. (See generally SAC). Plaintiffs also seek class action status in the SAC. (See id. ¶¶ 33-50).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Although this pleading standard "does not require 'detailed factual allegations,' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (alteration added) (quoting Twombly, 550 U.S. at 555).
Pleadings must contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). Indeed, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556). To meet this "plausibility standard," a plaintiff must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678 (alteration added) (citing Twombly, 550 U.S. at 556). When reviewing a motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff and take the factual allegations therein as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).
Defendants seek dismissal of all seven counts of the SAC. (See generally Mot.). They argue a mortgagee is not barred from filing a new foreclosure action based on a mortgagor's different default, even if it brought and dismissed a foreclosure action on an earlier default. (See id. 2). They challenge the quiet title action on the ground Plaintiffs do not allege an invalid cloud on their title and Defendants' mortgage lien is valid. (See id. 3). They assertCounts VI and VII do not allege any facts in support of the claims. (See id.) And they argue Counts II and IV for injunctive relief fail because Plaintiffs do not allege the four prerequisites for the grant of an injunction. (See id.).
In Counts I and III, Plaintiffs seek a declaration the Note and Mortgage are unenforceable. (See SAC ¶¶ 71-82, 93-100). Defendants assert the Note and Mortgage remain enforceable because the Note and Mortgage are valid and each of Plaintiffs' subsequent defaults has a five-year limitations period. (See Mot. 5-10).
Florida law establishes a five-year statute of limitations for actions on a contract, obligation, or liability founded on a written instrument or to foreclose a mortgage. See FLA. STAT. § 95.11(2)(b-c). "The limitations period provided in section 95.11(2)(c) does not affect the life of the lien or extinguish the debt; it merely precludes an action to collect the debt after five years." Houck Corp. v. New River, Ltd., Pasco, 900 So. 2d 601, 603 (Fla. 2d DCA 2005). "[T]he duration of the lien created by such mortgage is governed by section 95.281, Florida Statutes . . . , a statute of repose." Id. at 604 (alterations added) (quoting USX Corp. v. Schilbe, 535 So. 2d 719, 719 (Fla. 2d DCA 1989)). Under Florida Statute section 95.281(1)(a), a mortgage lien terminates five years after the date of maturity of an obligation secured by a mortgage, if the final maturity date is "ascertainable from the record of it." Id. Here, Plaintiffs concede the date of maturity of the obligation is September 1, 2035 (see SAC ¶ 53), and thus the lien on the property still exists and has not been extinguished. See Houck Corp., 900 So. 2d at 604.
Plaintiffs argue Defendants' failure to "follow through and timely file a foreclosure action within five years of acceleration of the debt" in October 2008 entitles them to cancel theNote and Mortgage and remove the lien from the property's title. (Resp. 5). Other courts have confronted and rejected strikingly similar arguments. For instance, in Dorta v. Wilmington Trust National Association, No. 5:13-cv-185-Oc-10PRL, 2014 WL 1152917, at *2-4 (M.D. Fla. Mar. 24, 2014), the plaintiff claimed a note and mortgage were not enforceable because a default and acceleration occurred in 2007 and the five-year limitations period on the default expired before she brought her action to quiet title. The mortgagee had filed a foreclosure action after the default, which was dismissed without prejudice. See id. at *1. Relying on Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004) (per curiam), the district court held the mortgagee "has not lost its right to enforce the Note and the Mortgage (and in turn neither document is invalid) simply because its first foreclosure action was dismissed." Id. at *6 ().
Pursuant to Singleton, when "a mortgagee initiates a foreclosure action and invokes its right of acceleration, if the mortgagee's foreclosure action is unsuccessful for whatever reason, the mortgagee still has the right to file later foreclosure actions — and to seek acceleration of the entire debt — so long as they are based on separate defaults." Id. "[A]n unsuccessful foreclosure action does not subsequently render a...
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