Rodriguez v. Wells Fargo Bank, N.A.

• Decision Date: 14 October 2015
• Docket Number: No. 4D14–100.,4D14–100.
• Parties: Mario A. RODRIGUEZ and Lendy Rodriguez, Appellants, v. WELLS FARGO BANK, N.A., d/b/a America's Servicing Company, Appellee.
• Court: Florida District Court of Appeals

178 So.3d 62

Mario A. RODRIGUEZ and Lendy Rodriguez, Appellants,

v.WELLS FARGO BANK, N.A., d/b/a America's Servicing Company, Appellee.

No. 4D14–100.

District Court of Appeal of Florida, Fourth District.

Oct. 14, 2015.

Brian Korte of Korte and Wortman, P.A., West Palm Beach, for appellants.

Dean A. Morande and Michael K. Winston of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee.

CIKLIN, C.J.

Mario and Lendy Rodriguez ("the homeowners") appeal a final judgment of foreclosure entered in favor of Wells Fargo Bank, N.A. d/b/a America's Servicing Company ("the bank"), contending that the bank failed to establish standing to foreclose. We agree and reverse.

The bank brought a foreclosure action against the homeowners in 2010 alleging it was "the holder of the Mortgage Note and Mortgage and/or is entitled to enforce the Mortgage Note and Mortgage." The copy of the note attached to the complaint was not indorsed.

Prior to trial, the bank filed the original note in the court registry, which contained an indorsement in blank. At trial, the testimony of the bank's witness established that the bank was the servicer of the note and that the bank had possessed the original note since 2007. The trial court denied the homeowners' motion for involuntary dismissal of the action based on the bank's lack of standing and entered final judgment for the bank.

On appeal, the homeowners argue that standing to foreclose was not demonstrated because the bank failed to prove that it had authority to pursue the action as the servicer of the note. The bank counters that it demonstrated standing to foreclose through evidence that it possessed the note prior to the filing of the complaint.

" ‘We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.’ " Tremblay v. U.S. Bank, N.A., 164 So.3d 85, 86 (Fla. 4th DCA 2015) (quoting Lacombe v. Deutsche Bank Nat'l Trust Co., 149 So.3d 152, 153 (Fla. 1st DCA 2014) ).

"A crucial element of any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose" at the time the complaint is filed. McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170, 173 (Fla. 4th DCA 2012). " ‘[T]he person having standing to foreclose a note secured by a mortgage may be either the holder of the note or a nonholder in possession of the note who has the rights of a holder.’ " Wells Fargo Bank, N.A. v. Morcom, 125 So.3d 320, 321 (Fla. 5th DCA 2013) (quoting Deutsche Bank Nat'l Trust Co. v. Lippi, 78 So.3d 81, 84 (Fla. 5th DCA 2012) ).

" ‘The Florida real party in interest rule, Fla. R. Civ. P. 1.210(a), permits an action to be prosecuted in the name of someone other than, but acting for, the real party in interest.’ " Elston/Leetsdale, LLC v. CWCapital Asset Mgmt. LLC, 87 So.3d 14, 17 (Fla. 4th DCA 2012) (quoting Mortg. Elec. Registration Sys., Inc. v. Azize, 965 So.2d 151, 153 (Fla. 2d DCA 2007) ). A servicer that is not the holder of the note may have standing to commence a foreclosure action on behalf of the real party in interest, but it must present evidence, such as an affidavit or a pooling and servicing agreement, demonstrating that the real party in interest granted the servicer authority to enforce the note. See id. ("[A] servicer may be considered a party in interest to commence legal action as long as the trustee joins or ratifies its action.") (emphasis omitted); see also Russell v. Aurora Loan Servs., LLC, 163 So.3d 639, 643 (Fla. 2d DCA 2015) (reversing final judgment of foreclosure where servicer failed to adduce evidence of predecessor's authority to bring suit).

Because the bank was the servicer of the note and it brought the action in its own name, it was required to prove that it had authority to commence the foreclosure action. Although the bank established that it possessed the note at the time the complaint was filed and it filed the original note indorsed in blank, the record does not demonstrate when the blank indorsement was placed on the note. The bank therefore failed to prove that it had standing as the holder of the note when it commenced the action. Further, the bank failed to prove that it was a nonholder in possession of the note with the rights of a holder. The bank introduced no power of attorney, pooling and servicing agreement, or other evidence to show that the real party in interest authorized it to bring the action. Consequently, the bank failed to prove it had standing to enforce the note.

Pursuant to Florida Rule of Civil Procedure 1.420(b), "[a]fter a party seeking affirmative relief in an action tried by the court without a jury has completed the presentation of evidence, any other party may move for a dismissal on the ground that on the facts and the law the party seeking affirmative relief has shown no right to relief." Accordingly, the homeowners are entitled to an involuntary dismissal of the action, and we reverse and remand for the trial court to enter such an order.

In light of our reversal, the remaining issue raised by the homeowners is moot.

Reversed and remanded with instructions.

TAYLOR, J., concurs.

CONNER, J., concurs specially with opinion.

CONNER, J., concurring specially.

I concur with the majority opinion, but I write to address an area of foreclosure law regarding standing that I contend has become imprecise, and thus, somewhat unclear.

With some regularity in foreclosure actions, the complaint alleges, as in this case, that the plaintiff has alternative statuses as a "holder" of the note and a nonholder in possession with the rights of a holder, using some combination of words to allege that status. The homeowners argue that the case law has clearly held the two statuses are mutually exclusive; to have standing to enforce a note, one must be either a holder or a nonholder in possession with the rights of a holder, but one cannot be both. We are unaware of any case which makes such a definitive holding. Instead, the case law recognizes that standing can at times be "very complex" because "the ways to allege standing to foreclose on a note are many and often very complex." Wells Fargo Bank, N.A. v. Bohatka, 112 So.3d 596, 602 (Fla. 1st DCA 2013) ; see also Jelic v. LaSalle Bank, Nat'l Ass'n., 160 So.3d 127, 129 (Fla. 4th DCA 2015) (commenting on "the various ways a plaintiff can establish standing").

Due to plaintiffs frequently alleging alternative statuses for standing, the case law regarding standing in foreclosure cases has at times been somewhat imprecise, in large part because the cases do not always focus on and analyze the dual core elements of standing.¹ As discussed in more detail shortly, the core elements, established by Florida's Uniform Commercial Code (the Florida UCC), are (1) to whom is the note payable and (2) who has possession of the note on the date suit is filed.² In the context of bearer notes, some confusion in analysis has occurred" because it is sometimes forgotten that a thief can enforce a bearer note. For example, with regards to bearer notes, courts have concluded there was no standing because there was no proof of ownership of the note,³ when ownership status is not an element of standing; with bearer notes, possession of the note is the significant core element to be analyzed. Another example leading to some confusion is the frequent invocation of McLean v. JP Morgan Chase Bank National Ass'n, 79 So.3d 170 (Fla. 4th DCA 2012), when discussing principles of standing in foreclosure cases involving bearer notes:

"A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff's status as the holder of the note." [Focht v. Wells Fargo Bank, N.A., 124 So.3d 308, 310 (Fla. 2d DCA 2013) ] (citing McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170, 173 (Fla. 4th DCA 2012) ).

Tremblay v. U.S. Bank, N.A., 164 So.3d 85, 86 (Fla. 4th DCA 2015) ; see also Ham v. Nationstar Mortg., LLC, 164 So.3d 714, 717–18 (Fla. 1st DCA 2015). The discussion of McLean in the case law suggests that the types of proof presented define the theories or elements of standing, when such is not the case.

Statutory Framework as to Who Is Entitled to Enforce the Note

Florida case law makes clear that the right to enforce a mortgage (by forced sale of property) is dependent on the right to enforce the note secured by the mortgage. See WM Specialty Mortg., LLC v. Salomon, 874 So.2d 680, 682 (Fla. 4th DCA 2004) ("[A] mortgage is but an incident to the debt, the payment of which it secures.") (quoting Johns v. Gillian, 134 Fla. 575, 184 So. 140, 143–44 (1938) ). The person or entity entitled to enforce the note is the person or entity to whom payment on the note is due. § 673.6021(1), Fla. Stat. (2010) ("[A]n instrument is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument and to a person entitled to enforce the instrument."). Under the Florida UCC, the person or entity entitled to enforce the note (that is, receive payment on the note) must be either: (1) the holder of the note; (2) a nonholder in possession of the note who has the rights of a holder; or (3) a person or entity who is not in possession of the note because the note has been lost or was mistakenly surrendered or canceled as paid, but who has the status of a holder.

§ 673.3011, Fla. Stat. (2010). As can be seen from the statutory requirements, the person or entity entitled to enforce the note must have the rights of a holder. The Florida UCC specifically provides that a person may be entitled to enforce a note "even though the person is not the owner of the instrument or is wrongful possession of the instrument. " § 673.3011, Fla. Stat. (2010) (emphasis added).

The Florida UCC defines a "holder" to be "[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified...