Pino v. Bank of N.Y.

• Decision Date: 07 February 2013
• Docket Number: No. SC11–697.,SC11–697.
• Parties: Roman PINO, Petitioner, v. The BANK OF NEW YORK, etc., et al., Respondents.
• Court: Florida Supreme Court

121 So.3d 23

Roman PINO, Petitioner,

v.The BANK OF NEW YORK, etc., et al., Respondents.

No. SC11–697.

Supreme Court of Florida.

Feb. 7, 2013.

Amanda L. Lundergan and Thomas E. Ice of Ice Legal, P.A., Royal Palm Beach, FL, for Petitioner.

Craig Ronald Lynd, Curtis Alan Wilson and Robert J. Horst of Kaufman, Englett, and Lynd PLLC, Orlando, FL, for Amici Curiae Kaufman, Englett and Lynd, PLLC.

Katherine Eastmoore Giddings, Nancy Mason Wallace and William Patrick Heller of Akerman Senterfitt, Tallahassee, FL; Bruce S. Rogow and Tara A. Campion of Bruce S. Rogow, P.A., Fort Lauderdale, FL, for Respondents.

Kenneth Bradley Bell of Clark, Partington, Hart, Larry, Bond & Stackhouse, Pensacola, FL, for Amici Curiae Florida Land Title Association.

Mitchell Wayne Berger, Fred Owen Goldberg, and Elaine Johnson James of Berger, Singerman, LLP, Boca Raton, FL, for Amici Curiae Mortgage Bankers Association.

PARIENTE, J.

The issue we address in this case involves an interpretation of the applicable Florida Rules of Civil Procedure governing voluntary dismissals and the extent of the trial court's inherent authority to remedy alleged fraud on the court through the reinstatement of a dismissed lawsuit. Although the context of the issue as presented in this case arises out of a widespread problem associated with fraudulent documentation filed by various financial institutions seeking to foreclose on real property throughout the state, the specific question we confront centers on the proper interpretation of the Florida Rules of Civil Procedure pertaining to voluntary dismissals and the extent of a trial court's inherent authority, which is an issue that affects all civil cases in this state.

This case is not about whether a trial court has the authority in an ongoing civil proceeding to impose sanctions on a party who has filed fraudulent documentation with the court. Rather, the specific and narrow question we are asked to resolve is whether an allegation of fraud on the court empowers a trial court to strike a notice of voluntary dismissal, which was properly served by the plaintiff pursuant to Florida Rule of Civil Procedure 1.420(a)(1), to reinstate the dismissed action in order to then again dismiss the action with prejudice as a consequent sanction.¹ In this case, the defendant in the trial court, Roman Pino, who had defaulted on his mortgage, sought to have a notice of voluntary dismissal of the mortgage foreclosure action struck and the case reinstated in order for the trial court to then dismiss the action with prejudice as a sanction to the mortgage holder for allegedly filing fraudulent documentation regarding ownership of the mortgage note.

Sitting en banc, the Fourth District Court of Appeal in Pino v. Bank of New York Mellon, 57 So.3d 950, 952 (Fla. 4th DCA 2011), held that a trial court lacks the authority to set aside a plaintiff's notice of voluntary dismissal at the request of a defendant where the plaintiff has not obtained any affirmative relief before dismissing the case. Because the underlying facts of this case centered on the broader issue of mortgage foreclosure complaints that appeared to be tainted by fraudulent documentation filed on behalf of various financial institutions, the Fourth District certified the following question as one of great public importance:

DOES A TRIAL COURT HAVE JURISDICTION AND AUTHORITY UNDER RULE 1.540(B), FLA. R. CIV. P., OR UNDER ITS INHERENT AUTHORITY TO GRANT RELIEF FROM A VOLUNTARY DISMISSAL WHERE THE MOTION ALLEGES A FRAUD ON THE COURT IN THE PROCEEDINGS BUT NO AFFIRMATIVE RELIEF ON BEHALF OF THE PLAINTIFF HAS BEEN OBTAINED FROM THE COURT?

Id. at 955. We have jurisdiction. Seeart. V, § 3(b)(4), Fla. Const.

We answer the certified question in the negative and hold that when a defendant alleges fraud on the court as a basis for seeking to set aside a plaintiff's voluntary dismissal, the trial court has jurisdiction to reinstate the dismissed action only when the fraud, if proven, resulted in the plaintiff securing affirmative relief to the detriment of the defendant and, upon obtaining that relief, voluntarily dismissing the case to prevent the trial court from undoing the improperly obtained relief. Any affirmative relief the plaintiff obtained against the defendant as a result of the fraudulent conduct would clearly have an adverse impact on the defendant, thereby entitling the defendant to seek relief to set aside the voluntary dismissal pursuant to Florida Rule of Civil Procedure 1.540(b)(3). Where the plaintiff does not obtain affirmative relief before seeking the dismissal, measures other than reinstating the dismissed action exist to protect against a plaintiff's abuse of the judicial process. We also conclude that a trial court does not have the inherent authority to strike the notice of voluntary dismissal in such a circumstance. Because in this case the Bank of New York Mellon (BNY Mellon) did not obtain any affirmative relief against Pino before the complaint was dismissed, and because the trial court did not have inherent authority to strike the notice of voluntary dismissal, we approve the result reached by the Fourth District in Pino and write to fully explain our reasoning.

FACTS AND PROCEDURAL HISTORY

In October 2008, BNY Mellon commenced an action in the trial court to foreclose a mortgage held on real property owned by Roman Pino. No party disputes that Pino was in default of the mortgage at the time the suit was filed. BNY Mellon attached to its complaint a copy of the purported mortgage at issue, but BNY Mellon was neither listed nor referenced anywhere on the document. Instead, the attached mortgage listed another entity, Silver State Financial Services, Inc. (SSFS), as the lender, and yet another entity, Mortgage Electronic Registration Systems, Inc. (MERS), as the mortgagee.

Despite not being listed on any of the attached documentation, BNY Mellon alleged in the October 2008 complaint that it owned and held the promissory note and mortgage by assignment. A document evidencing such an assignment or transfer was not attached, and the complaint was silent as to whether the note had ever been negotiated and transferred to BNY Mellon in the manner provided by law.²BNY Mellon further alleged that the original note had been “lost, destroyed or stolen.”

Pino initially moved to dismiss BNY Mellon's complaint for, among other things, the failure to state a cause of action. In his motion, Pino alleged that the October 2008 complaint was defective because BNY Mellon had failed to attach either a copy of the note or a copy of the assignment (or any other evidence of a transfer of ownership). Pino claimed the assignment was crucial to establishing BNY Mellon as a real party in interest to this foreclosure action.

In an apparent attempt to remedy the defects of the original complaint, BNY Mellon filed an amended complaint in February 2009. The amended complaint contained allegations nearly identical to those set forth in the original October 2008 complaint, but the amended complaint no longer stated that the original note had been lost, destroyed, or stolen. In fact, attached to the amended complaint were copies of two documents not included with the original complaint: one entitled “Adjustable Rate Note” and the other entitled “Assignment of Mortgage.”

The Adjustable Rate Note, dated July 25, 2006, listed SSFS as the lender. The Assignment of Mortgage showed MERS, through its assignor, Countrywide Home Loans, Inc., transferring and assigning the subject note and mortgage to BNY Mellon. The date of execution of the attached Assignment of Mortgage was listed as September 19, 2008—twenty days before BNY Mellon had filed the original October 2008 complaint.

In a motion for sanctions brought pursuant to section 57.105, Florida Statutes (2009), and dated February 17, 2009, Pino alleged that the unrecorded Assignment of Mortgage in the amended complaint was fraudulently backdated and had been created with the intent to commit fraud on the court. Section 57.105 authorizes sanctions in the form of attorney's fees and other expenses if a trial court determines the party or the party's attorney knew or should have known that at the time a claim or defense was presented that the claim or defense “[w]as not supported by the material facts necessary to establish the claim or defense” or “[w]ould not be supported by the application of then-existing law to those material facts.” § 57.105(1)(a)-(b), Fla. Stat. (2009). The statute also provides for a twenty-one-day safe harbor provision allowing the party to withdraw or correct “the challenged paper, claim, defense, contention, allegation, or denial.” § 57.105(4), Fla. Stat. (2009).

To prove these factual allegations, Pino explained that he had initiated discovery and that upon doing so he would move to dismiss the case for fraud on the court.³ Pino subsequently scheduled depositions of various notaries and witnesses—all employees of BNY Mellon's law firm—to take place on March 12, 2009. However, before the scheduled depositions occurred, and within the twenty-one-day safe harbor period set forth in section 57.105(4), BNY Mellon served a notice of voluntary dismissal dated March 9, 2009, dismissing the foreclosure complaint without prejudice pursuant to Florida Rule of Civil Procedure 1.420(a)(1).

Pino did not act on any asserted impropriety in BNY Mellon's taking of a voluntary dismissal without prejudice until BNY Mellon refiled the foreclosure action. On August 13, 2009, approximately five months after serving the notice of voluntary dismissal, BNY Mellon refiled an identical action against Pino to foreclose on the same mortgage with the assistance of the same law firm that had filed the initial action. Like the amended February 2009 complaint, the August 2009 complaint did not claim that the note was lost, missing, or stolen. However, attached to the August 2009 complaint was a new Assignment of Mortgage...