Tracey v. Wells Fargo Bank, N.A., Case No. 2D16-5091

• Decision Date: 23 March 2018
• Docket Number: Case No. 2D16-5091
• Parties: MARLYN TRACEY, Appellant, v. WELLS FARGO BANK, N.A., as Trustee for the Certificateholders of Banc of America Mortgage Securities, Inc. 2007-2 Trust, Mortgage Pass-Through Certificates, Series 2007-2, Appellee.
• Court: Court of Appeal of Florida (US)

MARLYN TRACEY, Appellant, v. WELLS FARGO BANK, N.A., as Trustee for the Certificateholders

of Banc of America Mortgage Securities, Inc. 2007-2 Trust,

Mortgage Pass-Through Certificates, Series 2007-2, Appellee.

Case No. 2D16-5091

DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT

March 23, 2018

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

Appeal from the Circuit Court for Pinellas County; Karl B. Grube, Senior Judge.

Mark P. Stopa of Stopa Law Firm, Tampa, for Appellant.

Nancy M. Wallace of Akerman LLP, Tallahassee; William P. Heller of Akerman LLP, Fort Lauderdale; Celia C. Falzone of Akerman LLP, Jacksonville, and David A. Karp of Akerman LLP, Tampa, for Appellee.

LUCAS, Judge.

Marlyn Tracey appeals a final judgment foreclosing Wells Fargo Bank, N.A.'s (Wells Fargo) mortgage on her home. Ms. Tracey raises two issues on appeal. Finding merit in her first argument, we need not consider the second. The circuit court reversibly erred when it permitted Wells Fargo to amend its complaint during trial to conform to the evidence it presented of two unpled modification agreements.

The underlying litigation began on June 9, 2011, when Wells Fargo filed a complaint seeking to foreclose upon a mortgage on Ms. Tracey's property. The original complaint included as exhibits Ms. Tracey's promissory note, mortgage, and two loan modification agreements, dated May 8, 2009, and July 17, 2009, respectively. As originally filed, Wells Fargo's complaint specifically alleged that Ms. Tracey's breach of the modification agreements predicated its claim for relief.

Following an involuntary dismissal of that pleading, Wells Fargo changed tack with respect to its theory of recovery. On September 5, 2012, it filed an amended complaint, what would become the operative pleading for the remainder of this case, in which no mention was made of the previously asserted and attached modification agreements. For her part, Ms. Tracey's answer and affirmative defenses to the amended complaint did not raise either of these modification agreements as an avoidance to any part of Wells Fargo's claim. So, seemingly, whatever importance these modification agreements may have had—either as a basis for Wells Fargo's recovery or as an avoidance to it—was abandoned as an issue for adjudication. The case then progressed in a not unordinary course for a residential mortgage foreclosure proceeding.

When the case went to trial four years later, Wells Fargo changed course yet one more time, reverting back to the modification agreements as a basis for its cause of action. Over objection, Wells Fargo admitted both modification agreementsinto evidence and called two witnesses who explained the succession of the note, Ms. Tracey's payment history, and that the balance was due and owing based upon the note and modification agreements. Wells Fargo's counsel argued that the omission of the modification agreements from the amended complaint was a "mistake or inadvertence" but that, in all events, their inclusion as part of its claim for relief visited no prejudice on Ms. Tracey because she signed the agreements and they were attached to a pleading—albeit the original, abandoned complaint. Ms. Tracey maintained that she was prejudiced by the change in Wells Fargo's theory of the case because she was unable to prepare her defense for an issue she had thought was abandoned four years earlier. Indeed, she testified that she was under the impression that the loan modification agreements Wells Fargo introduced had never progressed beyond proposals: she received blank envelopes from Wells Fargo regarding the agreements, and when she attempted to inquire about their status by telephone was directed to a call center in Bangladesh. Nevertheless, the circuit court granted Wells Fargo's motion and, following the conclusion of the trial, entered the final judgment of foreclosure—premised on the mortgage, promissory note, and both loan modification agreements—that we now have before us.

A circuit court's decision to amend the pleadings to conform to the evidence under Florida Rule of Civil Procedure 1.190(b) is one we review for abuse of discretion. Turna v. Advanced Med-Servs., Inc., 842 So. 2d 1075, 1076 (Fla. 2d DCA 2003). Our review here requires us to examine a particular aspect of rule 1.190(b):

Amendments to Conform with the Evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Suchamendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment, but failure so to amend shall not affect the result of the trial of these issues. If the evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended to conform with the evidence and shall do so freely when the merits of the cause are more effectually presented thereby and the objecting party fails to satisfy the court that the admission of such evidence will prejudice the objecting party in maintaining an action or defense upon the merits.

(Emphasis added.)

Without question, Ms. Tracey objected to Wells Fargo's reassertion of the loan modification agreements as a basis for its recovery at trial. She did not try Wells Fargo's claim on two modification agreements by express or implied consent. The question before us, then, is whether the circuit court's finding that she was not prejudiced by the late amendment amounted to an abuse of discretion. Under these facts, we hold that it was.

Few courts have attempted to lay hold of the precise measure of "prejudice" that rule 1.190(b) contemplates when a party objects to a motion to amend a pleading to conform to the evidence.¹ Cf. Smith v. Mogelvang, 432 So. 2d 119, 123 (Fla. 2d DCA 1983) ("There is a limit, which cannot be precisely delineated . . . beyond which parties may not depart from their pleadings."). But a few guiding principles canbe discerned. First and foremost, a court must be mindful of the larger purpose that pretrial pleadings fulfill in civil litigation—pleadings function as a safeguard of due process by ensuring that the parties will have prior, meaningful notice of the claims, defenses, rights, and obligations that will be at issue when they come before a court. See Pro-Art Dental Lab, Inc. v. V-Strategic Grp., LLC, 986 So. 2d 1244, 1252 (Fla. 2008) (" 'Florida law clearly holds that a trial court lacks jurisdiction to hear and to determine matters which are not the subject of proper pleading and notice,' and '[t]o allow a court to rule on a matter without proper pleadings and notice is violative of a party's due process rights.' " (alteration in original) (emphasis omitted) (quoting Carroll & Assocs., P.A. v. Galindo, 864 So. 2d 24, 28-29 (Fla. 3d DCA 2003))); Hart Props., Inc. v. Slack, 159 So. 2d 236, 239 (Fla. 1963) ("[I]ssues in a cause are made solely by the pleadings . . . . [The purpose of pleadings] is to present, define and narrow the issues, and to form the foundation of, and to limit, the proof to be submitted on the trial."); Land Dev. Servs., Inc. v. Gulf View Townhomes, LLC, 75 So. 3d 865, 871 (Fla. 2d DCA 2011) ("Due process protections prevent a trial court from deciding matters not noticed for hearing and not the subject of appropriate pleadings." (quoting Mizrahi v. Mizrahi, 867 So. 2d 1211, 1213 (Fla. 3d DCA 2004))); Rankin v. Rankin, 258 So. 2d 489, 491 (Fla. 2d DCA 1972) ("We simply say that the pleadings must be such as to afford both parties due process."). It must also be remembered that rule 1.190(b), like all the rules of civil procedure, aims "to prevent the use of surprise, trickery, bluff and legal gymnastics." Surf Drugs, Inc. v. Vermette, 236 So. 2d 108, 111 (Fla. 1970); see also Massey-Ferguson, Inc. v. Santa Rosa Tractor Co., 366 So. 2d 90, 93 (Fla. 1st DCA 1979) ("Thetrial judge aptly stated: 'The purpose of pleadings is to make issues. The purpose of issues is for people to know what they've got to meet and get ready to meet it.' ").²

Prejudice, then, under rule 1.190(b), appears to turn on whether a litigant's right to notice of what to prepare for at trial has been infringed. See, e.g., GGB Profit Sharing P'ship v. Goldberg, 166 So. 3d 847, 849 (Fla. 2d DCA 2015) (holding it was error to allow amendment to complaint to conform to the evidence so that plaintiff could change his theory of recovery from restitution to one based on his status as a beneficiary of a trust; "[b]ecause paragraph 6 [of the complaint] was not adequate to put GGB on notice of Goldberg's alternative theory, it was error for the trial court to consider it"); Bachman v. McLinn, 65 So. 3d 71, 74 (Fla. 2d DCA 2011) (concluding that the trial court erred in allowing the father to amend pleadings to conform to evidence at trial over the mother's objections because it "deprived the [m]other of the opportunity to prepare for the case that [the father] actually presented rather than for the one he pleaded, which was what she was expecting to defend"); Buday v. Ayer, 754 So. 2d 771, 772 (Fla. 2d DCA 2000) (reversing amendment of counterclaim to conform to the evidence where the original counterclaim sought specific performance and declaratory relief in areal property dispute but the counterclaimant pursued a claim for money damages at trial; "[n]othing in this case indicates that Ms. Buday was on notice that Mr. Ayer sought monetary damages; she had no reason to anticipate such a claim before the trial's commencement"); Dean Co. v. U.S. Home Corp., Inc., 485 So. 2d 438, 439 (Fla. 2d DCA 1986) (concluding that it was "obvious[] . . . error" for the trial court to permit a third-party plaintiff to amend its complaint for indemnification to include a claim for contribution at the conclusion of trial...