Verizzo v. Bank of N.Y. Mellon

• Decision Date: 21 June 2017
• Docket Number: Case No. 2D15–2508
• Citation: 220 So.3d 1262
• Parties: David VERIZZO, Appellant, v. The BANK OF NEW YORK MELLON f/k/a The Bank of New York, as Successor Trustee for JPMorgan Chase Bank, N.A., as Trustee for Novastar Mortgage Funding Trust, Series 2006–3 Novastar Home Equity Loan Asset–Backed Certificates 2006–3, Appellee.
• Court: Florida District Court of Appeals

220 So.3d 1262

David VERIZZO, Appellant,

v.The BANK OF NEW YORK MELLON f/k/a The Bank of New York, as Successor Trustee for JPMorgan Chase Bank, N.A., as Trustee for Novastar Mortgage Funding Trust, Series 2006–3 Novastar Home Equity Loan Asset–Backed Certificates 2006–3, Appellee.

Case No. 2D15–2508

District Court of Appeal of Florida, Second District.

Opinion filed June 21, 2017

David Verizzo, pro se.

Diana B. Matson and Joshua R. Levine, of Baker, Donelson, Bearman, Caldwell and Berkowitz, PC, Fort Lauderdale, for Appellee.

SALARIO, Judge.

We are again required to reverse a final judgment of foreclosure because of the plaintiff's failure to prove at trial the existence of standing at the inception of the case. See Stoltz v. Aurora Loan Servs., LLC , 194 So.3d 1097, 1098 (Fla. 2d DCA 2016) ("We are again required to reverse a final judgment of foreclosure because of the plaintiff's failure to prove at trial the existence of standing at inception of the case."). We remand for entry of an order of involuntary dismissal under Florida Rule of Civil Procedure 1.420(b).

The proceedings leading to the judgment on review span many years, but the facts relevant to our decision are few. On April 24, 2008, The Bank of New York, as successor trustee for Novastar Mortgage Funding Trust Series 2006–3, filed a complaint against David Verizzo to reestablish a lost note and to foreclose a mortgage securing the debt the note evidenced.¹ The bank attached a copy of the mortgage but not a copy of the note.² The mortgage stated that the borrower and mortgagor was Mr. Verizzo, that the lender was Novastar Mortgage, Inc., and that the mortgagee was Mortgage Electronic Registration Systems, Inc., as Novastar's nominee.

Mr. Verizzo filed an answer containing an affirmative defense that the bank lacked standing to enforce the note. That answer put the bank on notice that its standing was at issue and imposed upon it the burden to prove at trial that it had standing to enforce the note and mortgage. See Dickson v. Roseville Props., LLC , 198 So.3d 48, 50 (Fla. 2d DCA 2015) ; see also May v. PHH Mortg. Corp. , 150 So.3d 247, 248 (Fla. 2d DCA 2014) (holding that the plaintiff in a foreclosure action has the burden to prove standing at trial). That burden included proving not only its standing at the time the case was tried but also when the case was filed. May , 150 So.3d at 248–49.

In the mine-run foreclosure case that comes to this court, the plaintiff's standing to enforce the note and mortgage hinges on whether the plaintiff is the holder of the note. See § 673.3011(1), Fla. Stat. (2008) ; see, e.g. , Russell v. Aurora Loan Servs., LLC , 163 So.3d 639, 642 (Fla. 2d DCA 2015). That is the issue in this case as well.³ Because the bank was not the original lender on the note—Novastar was—it could prove standing as a holder by presenting the note with a blank indorsement or special indorsement naming it as the holder, an assignment of the note to it, or other admissible evidence sufficient to prove that it is in fact the noteholder. See Focht v. Wells Fargo Bank, N.A. , 124 So.3d 308, 310 (Fla. 2d DCA 2013).

After lengthy pretrial litigation—including two bankruptcies and a pit stop in this court—the case went to trial in July 2015.⁴ The bank presented the testimony of an employee of a mortgage servicer engaged by the bank and five documents: (1) a copy of a power of attorney dated April 14, 2014, through which "The Bank of New York Mellon f/k/a the Bank of New York as successor in interest to JPMorgan Chase Bank, N.A.," granted the servicer the right to act on the bank's behalf with respect to loans in the trust for which the bank purports to act as trustee here; (2) a copy of the note dated May 11, 2006; (3) a copy of the mortgage; (4) a copy of Mr. Verizzo's payment history; and (5) a copy of a default notice dated January 14, 2008, which was sent to Mr. Verizzo by a different servicer that identified "US Bank" as the "creditor." The copy of the note showed Novastar as the lender and contained no blank or special indorsement. Rather, it showed that Novastar was the original owner and holder of a note that had not been negotiated. See §§ 673.1101(1) (identifying the party to whom an instrument is initially payable), .2011(2) (defining the steps Novastar was required to take to negotiate the instrument as transfer of possession and indorsement).⁵

The bank did not introduce any evidence at trial explaining how it became the noteholder. The representative of the servicer did not testify about what happened to the note after Novastar made the loan or how it came to the bank. The bank's trial evidence thus left significant evidentiary gaps concerning whether the note was negotiated—and, if so, when and by whom—and whether the bank became the holder—and, if so, when and how. There was also no testimony or documentary evidence showing that Mr. Verizzo's loan was actually a part of the trust for which the bank purports to serve as trustee.

Assuming for argument's sake that even with these evidentiary gaps, the bank made a prima facie case of its standing at the time of trial, it was nonetheless insufficient to show its standing at the time it filed the foreclosure complaint. On the record the bank made, we know that Novastar was the noteholder when the loan was made in May 2006, but who had authority to enforce the note when the complaint was filed in April 2008 is anybody's guess. We might speculate based on the bank's documents that after the loan was made it was put into the trust, that JPMorgan was originally appointed trustee, that the bank became the successor trustee prior to filing, and that the note was negotiated in accord with those transactions. But speculation is all that is. The bank presented no direct or circumstantial evidence to take these assumptions from the level of speculation to the level of prima facie proof that it held the note or otherwise had standing at the time it filed the foreclosure complaint. See Stone v. BankUnited , 115 So.3d 411, 413 (Fla. 2d DCA 2013) ("[P]laintiff may demonstrate standing by submitting the note bearing a special endorsement in favor of the plaintiff or a blank endorsement, evidence of an assignment from the payee to the plaintiff, evidence of equitable transfer, or other evidence ... proving the plaintiff's status as the holder of the note." (citing McLean v. JP Morgan Chase Nat'l Ass'n , 79 So.3d 170, 173 (Fla. 4th DCA 2012) )).

The bank says that we can find the missing links in two assignments that transferred the mortgage—but not the note—from MERS to the bank dated May 12, 2008, and July 6, 2010, which Mr. Verizzo had admitted into evidence during his defense case. There are two problems here. First of all, the assignments do not purport to transfer the note, and our court has held that an assignment of mortgage that does not also transfer the note, at least standing alone, does not prove that a foreclosure plaintiff has the rights to enforce the note. Caballero v. U.S. Bank Nat'l Ass'n , 189 So.3d 1044, 1046 (Fla. 2d DCA 2016) ("[T]he assignment was insufficient to show standing because it only purported to assign the mortgage, not the note."); see also Eaddy v. Bank of Am., N.A. , 197 So.3d 1278, 1280 (Fla. 2d DCA 2016) (holding that plaintiff failed to prove standing where "the assignment of mortgage attached to [the] amended complaint reflects only the transfer of the mortgage and not the note"). Furthermore, even if an assignment of mortgage could, taken with other facts, constitute some quantum of circumstantial evidence that any rights related to the note were also transferred, the assignments here are dated after the filing of the bank's complaint. Because the assignments came after the bank initiated these proceedings, they do not say anything about whether the bank had standing when it initiated them. See Dickson , 198 So.3d at 51 ("[P]ostfiling assignments of mortgage ... could establish only that [the plaintiff] acquired standing in some manner after it filed the complaint."); see also Russell , 163 So.3d at 643 (holding that postfiling power of attorney did not establish standing at the time of filing).

The bank also asserts that excerpts of a pooling and servicing agreement dated May 2006 among Novastar, U.S. Bank, and JPMorgan prove its standing at the inception of the case. Even if we agreed with the bank about the import of these excerpts—we do not, but further explanation is unnecessary here—it would be a moot point because they...