Florida 2d DCA Gets It — Rules of Evidence Prevail!

See 2D08-3553 Fla 2d DCA BAC v Ginelle Jean-Jacques

This is the reason why I am offering the workshop on Expert Witnesses, i.e. — to highlight the rules of evidence, to coach those who would present opinions as evidence and to hone the skills of the litigator. While apparently narrow in its scope and reasoning, this decision nails down the issue of evidence versus assumptions or presumptions with finality. The case clearly establishes that merely filing papers with “argument” about what they are or what they mean is insufficient to establish anything at all.

The lesson here is not only that you can beat the pretender lenders, but also that YOU must conform to the rules of evidence, establishing a proper foundation and not try to finesse the court. And in non-judicial states the argument is plain: if they could not prevail in a judicial action, why should the court rubber stamp their non-judicial actions?

U.S. Bank filed documents that named other parties along with defective assignments that were not executed in recordable form. They tried to finesse the court by filing “original Note and Mortgage”. The Trial Court granted Summary Judgment, fooled by the appearance of proper documentation and the appellate court said that was an error and reversed the trial court’s summary final judgment.

Notable excerpts follow:

the space for the name of the assignee on this “assignment” was blank, and the “assignment” was neither signed nor notarized. Further, U.S. Bank did not attach or file any document that would authenticate this “assignment” or otherwise render it admissible into evidence.

U.S. Bank failed to meet this burden because the record before the trial court reflected a genuine issue of material fact as to U.S. Bank’s standing to foreclose the mortgage at issue. The proper party with standing to foreclose a note and/or mortgage is the holder of the note and mortgage or the holder’s representative. See Mortgage Elec. Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007); Troupe v. Redner, 652 So. 2d 394, 395-96 (Fla. 2d DCA 1995); see also Philogene v. ABN Amro Mortgage Group, Inc., 948 So. 2d 45, 46 (Fla. 4th DCA 2006)

When exhibits are attached to a complaint, the contents of the exhibits control over the allegations of the complaint. See, e.g., Hunt Ridge at Tall Pines, Inc. v. Hall, 766 So. 2d 399, 401 (Fla. 2d DCA 2000) (“Where complaint allegations are contradicted by exhibits attached to the complaint, the plain meaning of the exhibits control[s] and may be the basis for a motion to dismiss.”); Blue Supply Corp. v. Novos Electro Mech., Inc., 990 So.2d 1157, 1159 (Fla. 3d DCA 2008); Harry Pepper & Assocs., Inc. v. Lasseter, 247 So. 2d 736, 736-37 (Fla. 3d DCA 1971) (holding that when there is an inconsistency between the allegations of material fact in a complaint and attachments to the complaint, the differing allegations “have the effect of neutralizing each allegation as against the other, thus rendering the pleading objectionable”).

U.S. Bank was required to establish, through admissible evidence, that it held the note and mortgage and so had standing to foreclose the mortgage before it would be entitled to summary judgment in its favor. Whether U.S. Bank did so through evidence of a valid assignment, proof of purchase of the debt, or evidence of an effective transfer, it was nevertheless required to prove that it validly held the note and mortgage it sought to foreclose. See Booker v. Sarasota, Inc., 707 So. 2d 886, 889 (Fla. 1st DCA 1998) (holding that the trial court, when considering a motion for summary judgment in an action on a promissory note, was not permitted to simply assume that the plaintiff was the holder of the note in the absence of record evidence of such).

The incomplete, unsigned, and unauthenticated assignment attached as an exhibit to U.S. Bank’s response to BAC’s motion to dismiss did not constitute admissible evidence establishing U.S. Bank’s standing to foreclose the note and mortgage, and U.S. Bank submitted no other evidence to establish that it was the proper holder of the note and/or mortgage. Essentially, U.S. Bank’s argument in favor of affirmance rests on two assumptions: a) that a valid assignment or transfer of the note and mortgage exists, and b) that a valid defense to this action does not. However, summary judgment is appropriate only upon record proof—not assumptions.

Note produced and Mortgage is not: Several possible answers:

Note produced and Mortgage is not: Several possible answers:

  1. Mortgage itself is not required in original form but a certified copy of what is recorded is required.
  2. That they do not have the original stamped copy is indicative but not proof that the mortgage was assigned or transferred in some way. Therefore you want someone with personal knowledge to swear what happened to the mortgage and specifically whether it was assigned, transferred, hypothecated or whether any instrument was executed by the named mortgagee that effects the terms, rights, obligations, ownership or control over the disposition of the mortgage. Put another way: who is it that could execute a satisfaction of mortgage that would satisfy a title expert?
  3. Original Note produced. Several cases where the “original” was a forged copy of the real original. Check with borrower to determine if it is their signature and whether all borrowers signed.
  4. Just because someone physically has possession of the note does not necessarily mean that they own it — but that raises a strong presumption which can only be rebutted by some proof of either a pattern that the mortgagee and payee on the note admits to regarding selling, transferring etc the note, or some documentation from the mortgagee files that shows that they only retained the rights to service the mortgage and received some payment for the full balance of the note or part of the balance of the note plus a “premium” which amounts to an undisclosed fee (TILA violation).
  5. It is probably true in many cases that any number of people got possession your borrower’s note without any rights to it in the process of multiple assignments. Transfer of possession implies transfer of ownership and rights but that is a presumption, not black letter law. So if you show that that going up the line that A transferred to B who transferred to C who transferred to D and the note is in B’s hands, B has no right to enforce the note or foreclose the mortgage. B lacks standing and they have not joined the real party in interest. They are at most a nominal plaintiff. Even if the statute allows a nominal plaintiff in possession of the note to enforce the note and foreclose on the mortgage, they cannot do so without someone having personal knowledge and authority to state that the note is in default and that the nominal plaintiff is instructed to enforce. But in our example if C instructs nominal Plaintiff B and the note and mortgage are held by D then the standing and real party in interest problem still exists — the Defendant could still be sued again by the real party in interest for a double collection, thus the action must be dismissed with prejudice.
  6. In the securitization process, co-obligors (other borrowers) are created in the merger that results by pooling the mortgages and notes and terms are added, which is what happens when a 12% note is sold to an investor as 12% but it only provides for a 1% option ARM payment. Thus if the investor (owner of asset backed security) is in fact getting paid in full, then it is difficult if not impossible to say that one specific note is in default even if there is no evidence of borrower payment, because of the obvious intervention of third party payments.
  7. “Assignment” of the note must usually be accompanied by physical delivery. But in the securitization process this rarely occurred resulting legally in the Mortgagee/Payee receiving payment in full for a pool of mortgage notes that includes some reference to your borrower’s note. That being the case, the note is paid, the security is severed, and the party who now “owes” on the note is the Mortgagee/Payee who assigned for payment the ownership to a third party who in turn did the same thing. The “default is not that of the borrower anymore because a third party intervened and paid the full balance. This follows the same logic and theory that happens in a refinancing: the mortagee/payee on one mortgage note is paid by a third party. If the third party fails to record a valid assignmentof mortgage or a new mortgage under the laws governing recording, then there is no encumbrance. If the reason the third party paid was because of some deal with the original borrower then the new lender may have a cause of action for an unsecured debt. But in the securitization process the “new” lender is not even disclosed to the original borrower. That they chose to pay off the note is their problem and between them and the seller or their attorney who should have documented the transaction properly.
  8. Rules of evidence in each jurisdiction vary somewhat when it comes to negotiable instruments, assignment, delivery and recordation, so it should be checked both with state and statutes and even with one of the more experienced recording clerks in the county where the property is located.
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