Peters v. Bank of N.Y. Mellon

• Decision Date: 26 May 2017
• Docket Number: Case No. 2D15-2222.
• Citation: 227 So. 3d 175
• Parties: Hazel N. PETERS a/k/a Hazel N. Johnson; and Unknown Tenant 1 n/k/a Dave Peters, Appellants, v. The BANK OF NEW YORK MELLON, f/k/a The Bank of New York, as Trustee for Bear Stearns Asset Backed Securities Trust 2006–4, Asset Backed Certificates, Series 2006–4, and Leo Johnson, Appellees.
• Court: Florida District Court of Appeals

227 So.3d 175

Hazel N. PETERS a/k/a Hazel N. Johnson; and UnknownTenant 1 n/k/a Dave Peters, Appellants,

v.The BANK OF NEW YORK MELLON, f/k/a The Bank of New York, as Trustee for Bear Stearns Asset Backed Securities Trust 2006–4, Asset Backed Certificates, Series 2006–4, and Leo Johnson, Appellees.

Case No. 2D15-2222.

District Court of Appeal of Florida, Second District.

Opinion filed May 26, 2017

Mark P. Stopa of Stopa Law Firm, Tampa, for AppellantHazel N. Peters a/k/a Hazel N. Johnson.

Kristen M. Crescenti, Christopher C. O'Brien and Ronnie J. Bitman of Pearson Bitman LLP, Maitland, for Appellee The Bank of New York Mellon.

No appearance for AppelleeLeo Johnson.

WALLACE, Judge.

Hazel N. Peters, a/k/a Hazel N. Johnson(Ms. Peters), challenges a final judgment of foreclosure in favor of The Bank of New York Mellon (the Bank) entered after a bench trial.Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse.

I.THE FACTS AND THE PROCEDURAL BACKGROUND

On March 13, 1998, Ms. Peters and Leo Johnson executed a note in favor of ContiMortgage Corporation as the Lender.The note was secured by a standard residential mortgage on real property in Lee County, Florida.The mortgage also named ContiMortgage Corporation as the Lender.

On January 28, 2013, the Bank filed the underlying action to foreclose the mortgage and for the reestablishment of the note, which the Bank alleged had been lost.The Bank's complaint alleged September 18, 2008, as the date that the note went into default.The Bank filed a lost note affidavit dated on October 31, 2006, and executed on behalf of EMC Mortgage Corporation(EMC), a prior holder of the mortgage.In the affidavit, the affiant merely asserted that the note "was lost and has not been paid, satisfied, assigned, pledged, transferred or hypothecated in any way."The affidavit did not provide any details regarding the date or circumstances of the asserted loss of the note.A copy of the note was attached to the affidavit.The copy of the note did not reflect any indorsements or allonges.The Bank subsequently filed another lost note affidavit executed on behalf of Select Portfolio Servicing, Inc.(SPS), the current servicer for the loan.The copy of the note attached to the SPS affidavit was identical to the copy attached to the EMC affidavit.

Ms. Peters filed an answer and affirmative defenses to the complaint.In her answer, Ms. Peters denied the material allegations of the complaint and asserted numerous affirmative defenses.In pertinent part, Ms. Peters denied that the Bank had standing to enforce the note and mortgage, asserted that the Bank's action to reestablish the lost note was barred by the applicable statute of limitations, and claimed that the Bank had failed to comply with a condition precedent to foreclosure because it had not notified the borrower of the claimed assignment of the loan within thirty days of the assignment in accordance with section 559.715, Florida Statutes(2012).

The lost note was payable to ContiMortgage Corporation; it had not been indorsed in blank or payable to the order of the Bank.At trial, the Bank sought to establish its ownership of the lost note with a series of four assignments of mortgage.The first assignment, dated April 8, 1998, was from ContiMortgage Corporation to ContiWest Corporation.The second assignment, dated April 7, 1998, was from ContiWest Corporation to Manufacturers and Traders Trust Company.Although the second assignment was dated one day before the first one, it was recorded after the recording of the first one.The third assignment, dated June 28, 2010, was from Manufacturers and Traders Trust Company to EMC.Each of the first three assignments expressly assigned both the mortgage and the note that was secured by it.

The fourth assignment, dated December 7, 2012, was from EMC to the Bank.In pertinent part, the fourth assignment assigned "all of Assignor's right, title and interest all beneficial interest under a certain Mortgage, dated March 13, 1998, made and executed by Leo Johnson and Hazel N. Johnson fka Hazel N. Peters to ContiMortgage Corporation ...."¹At trial, Ms. Peters argued that the fourth assignment was insufficient to establish the Bank's ownership of the lost note because it assigned only the mortgage, not the note.The trial court ruled that the fourth assignment was sufficient to assign the note as well as the mortgage and rejected Ms. Peters' argument.The trial court admitted the certified copies of the four assignments into evidence over Ms. Peters' objection.

Counsel for the Bank conceded that the note and mortgage at issue had been the subject of two prior foreclosure actions filed in the Lee County Circuit Court.The first action was filed in 2001; the second was filed in 2004.Notably, both actions, which were subsequently dismissed, included a count for the reestablishment of a lost note.Based on the filing of the prior actions and the first lost note affidavit executed in 2006, Ms. Peters argued that the Bank's action to reestablish the lost note was barred because it had not been brought within the bar of the five-year statute of limitations set forth in section 95.11(2)(b), Florida Statutes(1997).The trial court rejected this argument, reasoning as follows:

The purpose of the statute of limitations is to try to prevent stale claims, okay, but my belief—and this is going to be the ruling of the Court—that the loss or discovery of the lost instrument is not a claim.It's an event.It's nothing that gives rise to a claim that would give rise to [a] cause of action.The only time that there's going to be a claim resulting from a lost instrument is when it needs to be enforced and that is when it goes into default.So the ruling of the Court ... is going to be that there is no need once a lost negotiable instrument is discovered as being lost, that they have to file a cause of action to reestablish that note when that note is not being sought to be enforced.

Upon inquiry by counsel as to the effect of the filing of the two prior actions to enforce the lost note on the accrual of the cause of action, the trial court reiterated its ruling that the statute of limitations had not run so as to bar the current action to reestablish the lost note.

The Bank called a single witness at trial, Cynthia Stevens.At the conclusion of the presentation of Ms. Stevens's testimony, the trial court rejected all of Ms. Peters' other arguments, including those based on the Bank's asserted lack of standing and noncompliance with the requirements of section 559.715.The trial court entered the final judgment of foreclosure on April 17, 2015.This appeal followed.

II.MS. PETERS' APPELLATE ARGUMENTS

On appeal, Ms. Peters raises three points.First, she argues that the Bank failed to prove its standing to enforce the lost note.Second, Ms. Peters contends that the Bank's claim to reestablish the lost note is barred by the applicable statute of limitations.Third, she asserts that the Bank failed to prove that it gave Ms. Peters written notice of the assignment of the loan at least thirty days before the filing of the underlying action as required by section 559.715.

Ms. Peters' third point is without merit.SeeBrindise v. U.S. Bank Nat'l Ass'n, 183 So.3d 1215, 1219–20(Fla. 2d DCA), review denied, No. SC16–300, 2016 WL 1122325(Fla.Mar. 22, 2016);Nationstar Mortg., LLC v. Summers, 198 So.3d 1162, 1162(Fla. 1st DCA2016)(per curiam affirmance citing Brindisewith approval);cf.Bank of Am., N.A. v. Siefker, 201 So.3d 811, 817–18(Fla. 4th DCA2016)(holding that section 559.715 was applicable to the mortgage foreclosure action brought by Bank of America, but that the statute did not operate as a condition precedent to bringing a mortgage foreclosure action).Ms. Peters' second point regarding the application of the statute of limitations to an action for the reestablishment of a lost promissory note raises an issue that is apparently one of first impression in Florida.Although the statute of limitations issue raises interesting questions, our resolution of Ms. Peters' first issue makes it unnecessary to address her arguments regarding the statute of limitations.Accordingly, we turn now to the issue of the Bank's standing to enforce the lost note.

III.DISCUSSION

Our review of a trial court's ruling regarding whether a foreclosure plaintiff has standing is de novo.SeeGonzalez v. BAC Home Loans Servicing, L.P., 180 So.3d 1106, 1108(Fla. 5th DCA2015)(citingSchmidt v. Deutsche Bank, 170 So.3d 938, 941(Fla. 5th DCA2015) )."A trial court's determination of whether a party has reestablished a lost note is reviewed for sufficiency of the evidence."Home Outlet, LLC v. U.S. Bank Nat'l Ass'n, 194 So.3d 1075, 1077(Fla. 5th DCA2016)(citingCorrea v. U.S. Bank Nat'l Ass'n, 118 So.3d 952, 956(Fla. 2d DCA2013) ).

In order to establish its standing, the Bank had to prove either that it was the holder or the owner of the note.SeeSorrell v. U.S. Bank Nat'l Ass'n, 198 So.3d 845, 847(Fla. 2d DCA2016).Here, the Bank was not in possession of the note.The note was lost at least as early as October 31, 2006.When the note was lost, it had not been indorsed by the original lender either in blank or to another party.

Section 673.3091, Florida Statutes(2012), sets forth the requirements for a person not in possession of an instrument to enforce it:

(1) A person not in possession of an instrument is entitled to enforce the instrument if:

(a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the

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