Paul v. Bank

• Court: Florida District Court of Appeals
• Writing for the Court: LaROSE, Judge.
• Citation: Paul v. Bank, 68 So.3d 979 (Fla. App. 2011)
• Decision Date: 02 September 2011
• Docket Number: No. 2D10–3889.,2D10–3889.
• Parties: Joan B. PAUL, Appellant,v.WELLS FARGO BANK, N.A., Appellee.

68 So.3d 979

Joan B. PAUL, Appellant,

v.WELLS FARGO BANK, N.A., Appellee.

No. 2D10–3889.

District Court of Appeal of Florida, Second District.

Sept. 2, 2011.

Barbara Goolsby and Angela Thompson of Florida Rural Legal Services, Inc., Fort Myers, for Appellant.Erin M. Berger of Florida Default Law Group, P.L., Tampa, for Appellee.LaROSE, Judge.

The trial court entered a summary foreclosure judgment against Joan B. Paul. The trial court subsequently denied her motion to set aside that judgment. Mrs. Paul moved for relief from that decision; the trial court entered an order denying relief. Mrs. Paul appeals from that order. We have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(A). Because the trial court denied the motion based on a mistake of law, we reverse.

Factual Background

In July 2009, Wells Fargo filed a foreclosure action against Mrs. Paul. She was elderly and suffered from multiple physical and mental ailments. She did not respond to the complaint. Wells Fargo moved for a default and summary judgment. The trial court entered a final summary judgment against Mrs. Paul in February 2010; a foreclosure sale was set for May 2010.

Mrs. Paul's nephew, William Chiste, held a durable power of attorney authorizing him to act on Mrs. Paul's behalf. He lived in Missouri and did not learn of the foreclosure lawsuit until late March 2010. When he learned of the lawsuit, Mr. Chiste came to Florida promptly. He assisted his aunt in retaining Barbara Goolsby of Florida Rural Legal Services to file an emergency motion to set aside the final judgment and cancel the scheduled sale. See Fla. R. Civ. P. 1.540(b). Because the crowded foreclosure docket made it uncertain whether the trial court could hear the motion before the sale date, Ms. Goolsby asked Wells Fargo to abate the sale. The sale took place as scheduled. Wells Fargo purchased the property and assigned its rights to Freddie Mac, the Federal National Mortgage Association. ¹

Thereafter, the trial court heard Mrs. Paul's motion to set aside the judgment. Mrs. Paul first argued that Wells Fargo lacked standing to foreclose on a note and mortgage issued by Washington Mutual National Bank. The trial court properly rejected this argument. Wells Fargo's “possession of the original note, indorsed in blank, [is] sufficient under Florida's Uniform Commercial Code to establish that it was the lawful holder of the note, entitled to enforce its terms.” Riggs v. Aurora Loan Servs., LLC, 36 So.3d 932, 933 (Fla. 4th DCA 2010); see also Mortgage Elec. Registration Sys., Inc. v. Azize, 965 So.2d 151, 153 (Fla. 2d DCA 2007); Troupe v. Redner, 652 So.2d 394, 395–96 (Fla. 2d DCA 1995) (citing § 671.201(20), Fla. Stat. (1993)). We need say nothing further on this issue.

The trial court then considered the merits of Mrs. Paul's motion to set aside. We acknowledge that “default judgments are generally not favored by the courts, and a court's discretion should be liberally exercised and all reasonable doubt resolved in favor of granting applications for relief so as to permit a determination of the controversy upon the merits.” U.S. Tobacco Co. v. Hartford Accident & Indem. Co., 444 So.2d 81, 83 (Fla. 2d DCA 1984). But to set aside the default judgment, Mrs. Paul was required to demonstrate a legal excuse—such as excusable neglect—for not responding to the complaint, a meritorious defense, and due diligence in seeking relief after learning of the default. See Szucs v. Qualico Dev., Inc., 893 So.2d 708, 710 (Fla. 2d DCA 2005). Any reasonable doubt is to be resolved in favor of Mrs. Paul. Id.

Mrs. Paul and her daughter provided an affidavit asserting excusable neglect because they were incapable of responding to the complaint. They attached letters from physicians stating that Mrs. Paul lacked capacity to pay bills and take care of things in her daily life because of her mental ailments. The letters also reflected that the daughter's psychological limitations made it difficult for her to focus on her mother's affairs. As for a meritorious defense, Mrs. Paul averred that she qualified for a mortgage modification and could make the payments.

Wells Fargo countered that Mrs. Paul failed to show excusable neglect. It noted that Mrs. Paul's power of attorney was signed in late July 2009. According to Wells Fargo, because Mr. Chiste had the power of attorney before entry of the default, Mr. Chiste should have known about the foreclosure lawsuit and hired counsel sooner for Mrs. Paul.² Wells Fargo relied on the general principle that “a defendant's failure to retain counsel or to understand the legal consequences of his inaction is not excusable neglect.” Szucs, 893 So.2d at 711 (holding shareholder's failure to hire counsel because he did not understand plaintiff corporation was seeking money judgment did not constitute excusable neglect) (citing Joe–Lin, Inc. v. LRG Rest. Group, Inc., 696 So.2d 539, 540–41 (Fla. 5th DCA 1997) (holding defendant corporation's officers' belief that writing letter to plaintiff, instead of hiring counsel to answer complaint, was sufficient response did not constitute excusable neglect)); see Goldome v. Davis, 567 So.2d 909, 910 (Fla. 2d DCA 1990) (holding defendant's failure to hire counsel because he did not realize plaintiff sought money judgment was not excusable neglect); Claffey v. Serafino, 338 So.2d 270, 271 (Fla. 2d DCA 1976) (holding defendant's failure to hire counsel to answer the complaint because he thought he would receive further notice of the proceedings not excusable neglect). A close reading of those cases reveals that they involved defendants whose only excuse for failing to hire counsel was their misunderstanding of their legal obligations. None involve a defendant, such as Mrs. Paul, who claimed excusable neglect based on her mental ailments. Thus, the governing principle may be more accurately stated as “ absent other justifications, failure to hire counsel does not qualify as excusable neglect.” Schauer v. Coleman, 639 So.2d 637, 639 (Fla. 2d DCA 1994) (emphasis added) (citing Kapetanopoulos v. Herbert, 449 So.2d 947, 949 (Fla. 2d DCA 1984)).

Alternatively, Wells Fargo argued that Mrs. Paul did hire counsel and that counsel failed to answer the complaint. Wells Fargo used these same arguments to claim that Mrs. Paul did not act diligently in seeking relief.³ The record, however, contains nothing controverting Mrs. Paul's assertions that the attorney hired in 2009 was retained only to prepare a power of attorney so that Mr. Chiste could act on her behalf if needed and that Mr. Chiste did not know about the foreclosure lawsuit until sometime in March 2010. Mrs. Paul had no counsel in this lawsuit until she retained Ms. Goolsby.

The trial court denied Mrs. Paul's motion to set aside. It felt compelled to let the foreclosure stand because the property was already sold and Mrs. Paul did not act when she should have. The transcript of the hearing reflects the following exchange:

MS. GOOLSBY: Well, we are entitled to a hearing and an appeal on our motion to set aside the verified—

THE COURT: If you take an appeal, I have no jurisdiction to do anything in the case. It has been sold and I can't stop whatever has happened now.

MS. GOOLSBY: Well, you have the authority to stop it.

THE COURT: If you want a hearing on that matter, you need to bring me case law, a statute that says I can intervene. There is a rightful owner of that property at this point in time, ma'am. You're going to have to set another hearing. I'm not just going to jump into something. If you present me with case law, a statute, I'll be inclined to do that.

MS. GOOLSBY: Well, your honor, if there is an order that we brought before this Court and it has been denied, we are entitled—

THE COURT: Set up the hearing and give me a statute, and bring the authority.

MS. GOOLSBY: Under the Florida constitution—

THE COURT: Ma'am, I just ruled. If you want a hearing, please set a hearing.

MS. GOOLSBY: All right, we will be filing a motion. Thank you, your Honor.

The trial court directed Wells Fargo's counsel to prepare an order denying the motion. Counsel stated that he would show the proposed order to Ms. Goolsby before submitting it to the court. Instead, counsel sent the proposed order directly to the trial court without notice to Ms. Goolsby. The trial court signed the proposed order. The service list attached to the order included Mrs. Paul, but not Ms. Goolsby. Ms. Goolsby was not served with a copy of the order, despite having filed numerous documents as Mrs. Paul's counsel.

Within a couple of weeks, Ms. Goolsby discovered that the trial court had issued its order. She filed a motion for relief. As previously directed by the trial court, Ms. Goolsby submitted case law to allay the trial court's concern about its jurisdiction. See Sterling Factors Corp. v. U.S. Bank Nat'l Assoc., 968 So.2d 658, 665 (Fla. 2d DCA 2007) (holding circuit court has jurisdiction to set aside or reconsider foreclosure judgment upon proper motion after foreclosure sale).

Ms. Goolsby asked the trial court to vacate the earlier order and grant relief from the default foreclosure judgment. Ms. Goolsby requested that if the trial court declined to set aside the default judgment, the trial court allow Mrs. Paul an opportunity to appeal.

The parties addressed all issues related to the earlier order, including (1) whether the trial court should have copied Ms. Goolsby with the order, (2) whether the trial court could grant relief after sale, (3) whether Mrs. Paul's illness could be a basis to find excusable neglect, and (4) whether Wells Fargo had shown it had standing to foreclose. The trial court denied the motion, and this appeal ensues.

Failure to Copy Counsel with First Order

The trial court stated that it found no notice of appearance by Ms. Goolsby that would require copying her with the order denying relief from judgment. Ms. Goolsby, however, was not required to file a notice of...