Spencer v. Ditech Fin., LLC

• Decision Date: 04 April 2018
• Docket Number: Case No. 2D16–4817
• Citation: 242 So.3d 1189
• Parties: Isaiah L. SPENCER and Shatika L. Spencer, Appellants, v. DITECH FINANCIAL, LLC; CitiBank, National Association successor by merger to CitiBank, FSB; City of Tampa, Florida; Riverwalk at Waterside Island Townhomes Homeowners Association, Inc.; Waterside Community Association, Inc., Appellees.
• Court: Florida District Court of Appeals

242 So.3d 1189

Isaiah L. SPENCER and Shatika L. Spencer, Appellants,

v.DITECH FINANCIAL, LLC; CitiBank, National Association successor by merger to CitiBank, FSB; City of Tampa, Florida; Riverwalk at Waterside Island Townhomes Homeowners Association, Inc.; Waterside Community Association, Inc., Appellees.

Case No. 2D16–4817

District Court of Appeal of Florida, Second District.

Opinion filed April 4, 2018

Mark P. Stopa of Stopa Law Firm, LLC, Tampa; and Latasha Scott of Lord Scott, PLLC, Tampa, for Appellants.

Jonathan L. Blackmore and John D. Cusick of Phelan, Hallinan, Diamond & Jones, PLLC, Fort Lauderdale, for Appellee Ditech Financial, LLC.

No appearance for remaining Appellees.

KHOUZAM, Judge.

Isaiah and Shatika Spencer appeal the final judgment of foreclosure entered against them and in favor of EverHome Mortgage Company following a bench trial. Ditech Financial, LLC, was later substituted as party plaintiff for EverHome. We reverse and remand for the trial court to enter an order of involuntary dismissal because EverHome, Ditech's predecessor in interest, failed to establish as a condition precedent to filing suit that the Spencers were given notice of default as required by paragraph 22 of the mortgage.

The Spencers executed the note and mortgage on March 28, 2003. Federal National Mortgage Association was the lender. Paragraph 22 of the mortgage provided that prior to acceleration, the lender must give the borrower notice and an opportunity to cure the default. Paragraph 15 provided that any such notice must be written and "shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower's notice address if sent by other means."

In 2010, EverHome filed a foreclosure complaint against the Spencers. EverHome alleged that it was the servicer of the loan and the holder of the note. EverHome also alleged generally that all conditions precedent to the acceleration of the note and mortgage and the filing of the foreclosure suit had been fulfilled. The Spencers filed an answer denying that the conditions precedent had been met and an affirmative defense alleging that EverHome had failed to give them notice and an opportunity to cure as required.

At trial, EverHome admitted a default letter from EverHome to Mr. Spencer through the testimony of Ms. Knight, an employee of Ditech. Ms. Knight testified to the general industry standards and practices followed by servicers such as Ditech and EverHome to advise borrowers that their loans are in default. She identified the default letter addressed to Mr. Spencer and described the process by which the letter was generated and kept in the ordinary course of business.

In addition to the default letter itself, Ms. Knight's testimony was the only evidence that EverHome provided to show that the letter had been sent to the Spencers. Throughout Ms. Knight's testimony, Spencer repeatedly objected based on hearsay, arguing that Ms. Knight lacked personal knowledge to testify about EverHome's routine business practices because she was not an employee of EverHome. The court overruled Spencer's objections, and Ms. Knight testified that pursuant to EverHome's procedure and policy, once a letter is generated it is mailed. But she explained that her knowledge of these procedures and policies was based on "training." And when pressed, she admitted that this "training" consisted of informally discussing EverHome's policies and procedures with coworkers who currently worked for Ditech but had previously worked for EverHome.

Specifically, Ms. Knight testified as follows: "I have spoken with EverHome employees who are prior employees of EverHome, as we are instructed to by our supervisor as part of training because we are not going to travel every day to Jacksonville to sit down with someone when we have questions." Ms. Knight admitted that no such discussions about this loan or any other loan had taken place prior to 2014, when the service transfer occurred—years after the default letter, dated June 17, 2010, had been generated by EverHome. She further admitted that she had never worked for EverHome, had never sent default letters on behalf of EverHome, and had not read EverHome's written policies and procedures from June 2010. Ms. Knight admitted that she was not personally involved in sending the default letter at issue in this case and that she did not have any documents other than the letter itself to show that the letter was sent.

This evidence was insufficient to show that the default letter was actually sent. "The fact that a document is drafted is insufficient in itself to establish that it was mailed." Allen v. Wilmington Tr., N.A., 216 So.3d 685, 687–88 (Fla. 2d DCA 2017) ; see also Edmonds v. U.S. Bank Nat'l Ass'n, 215 So.3d 628, 630 (Fla. 2d DCA 2017) (citing Allen with approval). Rather, "mailing must be proven by producing additional evidence such as proof of regular business practices, an affidavit swearing that the letter was mailed, or a return receipt." Allen, 216 So.3d at 688.

Testimony regarding a company's routine business practices may establish a rebuttable presumption that the default letter was mailed. Id. (citing § 90.406, Fla. Stat. (2014) ). But the witness must have personal knowledge of the company's general mailing practice—meaning that the witness must be employed by the entity drafting the letters and must have firsthand knowledge of the company's routine practice for mailing letters. See id.; Edmonds, 215 So.3d at 630 ; see also CitiMortgage, Inc. v. Hoskinson, 200 So.3d 191, 192 (Fla. 5th DCA 2016) (holding that there was sufficient evidence to establish mailing based on routine business practices where witness testified that she had personally observed coworkers generate breach letters and deliver them to the mail room to be collected by the postal service). Here, Ms. Knight admitted that she was never employed by EverHome and did not have firsthand knowledge of EverHome's mailing practices as of the date the default letter was generated. Therefore, her testimony was insufficient to establish that the default letter was mailed.

Ditech relies on JPMorgan Chase Bank National Ass'n v. Pierre, 215 So.3d 633 (Fla. 4th DCA 2017), and Bank of America, N.A. v. Delgado, 166 So.3d 857 (Fla. 3d DCA 2015), to suggest that Ms. Knight's testimony was sufficient to establish mailing. These cases do not apply here because they addressed the sufficiency of evidence demonstrating an entity's boarding process to establish the admissibility of documents like default letters under the business records exception to the hearsay rule, as opposed to the sufficiency of evidence demonstrating an entity's routine business practices to establish that a default letter was mailed. See Allen, 216 So.3d at 687 ; Pierre, 215 So.3d at 637–39 ; Delgado, 166 So.3d at 859. It is true that in establishing admissibility under the business records exception, there is no requirement that the foundational witness be employed by the business whose records are at issue at the time the records were made. See Delgado, 166 So.3d at 860. And basic familiarity with the previous servicer or lender's practices for generating, storing, and sending a default notice in the normal course of business is all that is required to establish the admissibility of a default notice under the business records exception. See Pierre, 215 So.3d at 638–39 (citing Wells Fargo Bank, N.A. v. Balkissoon, 183 So.3d 1272, 1277 (Fla. 4th DCA 2016) ). But the admissibility of the default letter is not at issue in the instant case.

Because EverHome failed to show that it satisfied the condition precedent of giving notice prior to acceleration, we must reverse and remand for the trial court to enter an order of involuntary dismissal.

Reversed and remanded with instructions.

ROTHSTEIN–YOUAKIM, J., Concurs.

SALARIO, J., Concurs specially.

SALARIO, Judge, Specially concurring.

The Spencers argue in this appeal that the evidence was insufficient to sustain the judgment. They correctly point out that EverHome's sole trial witness, Ms. Knight, lacked any personal knowledge of EverHome's routine practice concerning the mailing of paragraph 22 letters and that without her testimony the evidence was insufficient as a matter of law to support a finding that such a letter was mailed to them. I agree with the reasoning of and the result reached by the majority, including the instruction that the trial court enter an order of involuntary dismissal instead of hold a new trial on remand, because I think as the majority does that both are compelled by our decisions in Edmonds, 215 So.3d at 631, and Allen, 216 So.3d at 688. See also Knight v. GTE Fed. Credit Union, 43 Fla. L. Weekly D348, ––– So.3d ––––, 2018 WL 844352 (Fla. 2d DCA Feb. 14, 2018). I write to express my growing unease with what we are saying in foreclosure cases about proceedings on remand when the plaintiff as appellee in our court has failed to prove at trial an element of or condition precedent to bringing the foreclosure action.

Outside the foreclosure context, our court routinely follows the general rule that a party that fails to meet its burden of proof in the trial court does not, when we reverse a judgment in its favor, get a second bite at the apple by way of a new trial or hearing on remand. See, e.g., Asset Mgmt. Holdings, LLC v. Assets Recovery Ctr. Invs., LLC, 238 So.3d 90, 2018 WL 1023916 (Fla. 2d DCA Feb. 23, 2018); Airsman v. Airsman, 179 So.3d 342, 345 (Fla. 2d DCA 2015) ; Carlough v. Nationwide Mut. Fire Ins. Co., 609 So.2d 770, 771–72 (Fla. 2d DCA 1992) (citing In re Forfeiture of 1987 Chevrolet Corvette, 571 So.2d 594, 596 (Fla. 2d DCA 1990) ). This is as it should be: The interests of the parties and the judicial system in finality and in avoiding drawn-out, expensive, piecemeal litigation require that the parties and the courts regard the trial as the brass ring and not as the first step of an odyssey to an...