U.S. Bank N.A. v. Engle

• Decision Date: 14 August 2020
• Docket Number: Case No. 2D18-3384
• Citation: 311 So.3d 197
• Parties: U.S. BANK N.A. as Trustee, Successor to Bank of America, N.A. as Trustee, Successor by Merger to LaSalle Bank N.A., as Trustee for Merrill Lynch First Franklin Mortgage Loan Trust 2007-1, Mortgage Pass-Through Certificates, Series 2007-1, Appellant, v. Charles W. ENGLE a/k/a Charles Engle, Appellee.
• Court: Florida District Court of Appeals

311 So.3d 197

U.S. BANK N.A. as Trustee, Successor to Bank of America, N.A. as Trustee, Successor by Merger to LaSalle Bank N.A., as Trustee for Merrill Lynch First Franklin Mortgage Loan Trust 2007-1, Mortgage Pass-Through Certificates, Series 2007-1, Appellant,

v.Charles W. ENGLE a/k/a Charles Engle, Appellee.

Case No. 2D18-3384

District Court of Appeal of Florida, Second District.

Opinion filed August 14, 2020

Ileen J. Cantor and Ronald M. Gache of Shapiro, Fishman & Gache, Boca Raton, for Appellant.

Daniel Bialczak of Korte & Associates, West Palm Beach, for Appellee.

ATKINSON, Judge.

U.S. Bank, N.A., appeals a final judgment entered in favor of borrower Charles W. Engle after he successfully moved for involuntary dismissal based upon several grounds including lack of standing, default notice, damages, and intent to reform the mortgage.Because U.S. Bank presented a prima facie case of mortgage foreclosure and reformation, we reverse.

Background

In May of 2003, Tommie Engle gifted a parcel of real estate located in Pasco County to Charles W. Engle(Engle) as tenants in common with Tracey Stalter.The warranty deed contained the following legal description of that property: "Lot K, Riverside Subdivision as per the plat thereof as recorded in Plat Book 6, Page 10, Public Records of Pasco County, Florida."In December of 2006, Engle and Stalter gave First Franklin a Division of National City Bank a mortgage on: "LOT K, RIVERSIDE SUBDIVISION, AS PER PLAT THEREOF AS RECORDED IN PLAT BOOK5, PAGE 1 PUBLIC RECORDS OF PASCO COUNTY, FLORIDA[,] which currently has the address of 6704 Canal Street, Hudson, Florida 34667."

The mortgage secured an adjustable-rate promissory note in the principal amount of $100,000 drafted by Engle.Pursuant to the terms of the note, the interest rate "may change on the first day of January 2009, and on that day every 6 month[s] thereafter," which was referred to as a "Change Date."On the first Change Date, the interest rate would "be based upon an Index[, which was] the average of interbank offered rates for 6 month U.S. dollar-denominated deposits in the London market (‘LIBOR’), as published in The Wall Street Journal ."The note provided that the interest rate would "never be greater than 14.0500%, nor less than 8.0500%."The initial interest rate was 8.0500%.

Engle stopped making payments in March of 2008, but U.S. Bank advanced the default date to September 1, 2011, for statute of limitations purposes.At the nonjury trial, the bank's witness, Tonya Williams, testified that Nationstar, U.S. Bank's servicer, drafted the default letters then sent them to a third-party vendor that printed and mailed the letters.The witness, a default case analyst with Nationstar, also testified about the vendor's general mailing practices:

Once the letter gets imaged over to WALZ, WALZ of course prints it out, mails it.They give Nationstar confirmation that letter was sent.Like I said earlier this is what the collection notice is from showing that the demand letter was sent by WALZ.The [tracking] system that WALZ has is from the United Parcel Servicing.So basically they take that information and copy and paste it on to the site so you can see the tracking of the letter.

U.S. Bank introduced, through Williams, a copy of the original promissory note, without objection, which contained indorsements that matched those on the copy attached to the original complaint.One indorsement was given by First Franklin, a division of National City Bank to First Franklin Financial Corporation.The other is a blank indorsement from First Franklin Financial Corporation.U.S. Bank also introduced business records showing that the interest rate from February 2009 until February 2018 remained at 8.05%.

At the close of U.S. Bank's case, Engle moved for an involuntary dismissal.With respect to the foreclosure, he argued that the bank had failed to prove that it had standing at the inception of the case, that it had mailed the default letter, and that it was entitled to the interest that it was seeking.He also claimed, regarding the reformation count, that the bank failed to prove "the intent of the original parties at the time that [the mortgage] would have been created" because "there was no word ‘intentever utilized here today in testimony."The trial court granted the motion for involuntary dismissal based upon "all grounds stated by defense counsel."The court was particularly concerned with the issue of damages because "without knowing the interest rate and how payments were applied I don't know how you can even begin to calculate ... how those other payments were applied."The bank timely appealed after the court denied its motion for rehearing.

U.S. Bank argues that the trial court erred by granting Engle's motion for involuntary dismissal because it proved a prima facie case of mortgage reformation and foreclosure."The ‘standard of review for a motion for involuntary dismissal is de novo."Deutsche Bank Tr. Co. Ams. as Tr. for Residential Accredit Loans, Inc. v. Harris, 264 So. 3d 186, 188(Fla. 4th DCA2019)(quotingDeutsche Bank Nat'l Tr. Co. v. Huber, 137 So. 3d 562, 563(Fla. 4th DCA2014) )."When an appellate court reviews the grant of a motion for involuntary dismissal, it must view the evidence and all inferences of fact in a light most favorable to the nonmoving party, and can affirm a directed verdict only where no proper view of the evidence could sustain a verdict in favor of the nonmoving party."Id.(citingHuber, 137 So. 3d at 563–64 ).

Analysis

To obtain a foreclosure judgment, the foreclosing lender must prove that it is entitled to enforce the promissory note, that the borrower defaulted under the terms of the note and mortgage, and that it properly accelerated the debt to maturity.SeeKelsey v. SunTrust Mortg., Inc., 131 So. 3d 825, 826(Fla. 3d DCA2014);see alsoWinchel v. PennyMac Corp., 222 So. 3d 639, 643(Fla. 2d DCA2017)("Once put at issue by a defendant, then, standing becomes a part of the prima facie case that a foreclosure plaintiff must prove in order to secure a judgment.").In addition, it must also establish the amount due by competent and substantial evidence.SeeGreen Emerald Homes, LLC v. 21st Mortg. Corp., 300 So.3d 698(Fla. 2d DCAJune 7, 2019).

I.Standing

U.S. Bank contends that it proved standing by way of the method described in Ortiz v. PNC Bank, National Ass'n, 188 So. 3d 923(Fla. 4th DCA2016)."[I]f the [b]ank later files with the court the original note in the same condition as the copy attached to the complaint, ... the combination of such evidence is sufficient to establish that the [b]ank had actual possession of the note at the time the complaint was filed and, therefore, had standing to bring the foreclosure action, absent any testimony or evidence to the contrary."Id. at 925. U.S. Bank presented a copy of the original note, which contained the same indorsements as those on the copy attached to the original complaint.Contrary to Engle's contention, the bank did not need to prove that the special indorsement was placed onto the note before the blank indorsement.The fact that the bank had a copy of the note containing a blank indorsement at the time the complaint was filed is sufficient to establish its entitlement to enforce the note as a holder.Seeid.Accordingly, the trial court erred by granting the motion for involuntary dismissal based on lack of standing.

II.Notice of Default

U.S. Bank contends that there was adequate proof that it mailed the default letter."Because the notice requirement of paragraph twenty-two is a condition precedent to foreclosure," U.S. Bank was required to offer proof that it provided the requisite notice to Engle before it instituted the foreclosure action.SeeFed. Nat'l Mortg. Ass'n v. Morton, 196 So. 3d 428, 429(Fla. 2d DCA2016)(citingKonsulian v. Busey Bank, N.A., 61 So. 3d 1283, 1285(Fla. 2d DCA2011) ).

Williams testified that Nationstar created the notice of default and it conveyed an image of the letter to the third-party vendor.She further testified that the vendor provided Nationstar with confirmation that the letter was sent, which is corroborated by the collection notes.The vendor input the tracking information from the United States Parcel Service onto a website where Nationstar can monitor the delivery status.

In Harris, a servicer's employee testified that the servicer created the default letters and electronically sent them to third-party vendors for printing and mailing.264 So. 3d at 192.The witness testified that, after the letter is mailed, the servicer "receives a notification from the third-party vendor, and someone from [the servicer's] pre-foreclosure department enters a note into the system indicating that the demand letter has been mailed."Id.The notes for the Harris loan, which were admitted into evidence, corroborated the witness's testimony.Id.This evidence, the court concluded, was sufficient to preclude involuntary dismissal.Id. at 192–93.Likewise, U.S. Bank presented sufficient evidence that it mailed Engle the default letter.As such, the trial court erred by granting involuntary dismissal.

III.The Amount Due

On appeal, Engle contends that the trial court properly granted involuntary dismissal because U.S. Bank offered insufficient proof of damages.He claims that the bank was required to introduce evidence of the index utilized to calculate the interest rate through the life of the loan.However, where an interest rate is adjustable,...