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On January 14, 2021, the United States Supreme Court handed down their decision in City of Chicago v. Fulton, No. 19-357, 2021 WL 125106 (Jan. 14, 2021). The question before the Court was whether an entity violates §362(a)(3) by retaining possession of a debtor’s property after a bankruptcy petition is filed. The Court held that mere retention of estate property after the filing of a bankruptcy petition does not violate §362(a)(3) of the Bankruptcy Code.
Until this decision, the majority position held by the Second, Seventh, Eighth, Ninth, and Eleventh Circuits was that the automatic stay prohibited a creditor’s passive retention of property seized before a bankruptcy case began. Weber v. SEFCU (In re Weber), 719 F.3d 72, 81 (2d Cir. 2013); Thompson v. General Motors Acceptance Corp., 566 F.3d 699 (7th Cir. 2009), Knaus v. Concordia Lumber Co. (In re Knaus), 889 F.2d 773, 775 (8th Cir. 1989); California Emp’t Dev. Dep’t v. Taxel (In re Del Mission Ltd.), 98 F.3d 1147, 1151 (9th Cir. 1996); Motors Acceptance Corp. v. Rozier (In re Rozier), 376 F.3d 1323, 1324 (11th Cir. 2004).
Florida Supreme Court Holds Borrower is Entitled to Attorney’s Fees Despite Bank’s Failure to Prove Standing at the Inception of the Case
On December 31, 2020, in Page v. Deutsche Bank Trust Company Americas, No. SC19-1137, the Florida Supreme Court quashed the Fourth DCA’s ruling that the borrower was not entitled to attorney’s fees due to the banks failure to prove standing, and approved the decisions made in Madl v. Wells Fargo Bank, N.A., 244 So. 3d 1134 (Fla. 5th DCA 2017) and Harris v. Bank of New York Mellon, 2018 WL 6816177 (Fla. 2d DCA 2018).
In Page, the lower court held that the bank did not prove standing at the time the complaint was filed, but did establish standing at trial. The Fourth DCA ruled that the borrower who successfully argues that the bank lacked standing at the time the suit was filed cannot rely on the contract to obtain attorney’s fees under Fla. Stat. section 57.105(7).
The Fourth DCA in Page certified conflict with the Fifth DCA’s decision in Madl and the Second DCA’s decision in Harris. Both Madl and Harris held that a prevailing borrower is entitled to attorney’s fees if it is established that plaintiff became subject to the unilateral fee provision in the contract. In other words, if plaintiff lacks standing at the time the suit was filed, but subsequently establishes standing at trial, then the borrower is entitled to attorney’s fees under section 57.105(7). By contrast, in Page, the Fourth DCA did not give weight to the fact that the plaintiff subsequently established standing at trial.
Florida’s Fourth DCA Confirms the One-Year Statute of Limitations for a Deficiency Action Brought Within a Foreclosure Case
On December 9, 2020, in Accardi v. Regions Bank, No. 4D20-0662, the Fourth DCA held that the one-year statute of limitations specified in section 95.11(5)(h), Fla. Stat., applies to a motion for deficiency judgment brought within an existing mortgage foreclosure action. The Court also determined the limitation period began with the issuance of the Certificate of Title.
On December 4, 2020, the Fifth District Court of Appeal of Florida, in Torruella and Luxury Living Developers Corporation v. Nationstar Mortgage, LLC, Case No. 5D19-3298, held that “a dismissal for lack of personal jurisdiction does not confer ‘prevailing party’ status on the party over whom the trial court lacks jurisdiction because the trial court does not rule on any issue central to the merits of the dispute, and the legal relationship between the parties following such a disposition has not been materially changed.”
This case is not yet final, and Padgett Law Group recommends reading the entire case for the specific facts that led to this holding.
If Borrower sends a Cease and Desist Letter Argument Can be Made that No Face to Face Requirement is Needed.
On March 25, 2020, the Fourth District Court of Appeal in Bank of America v. Jones, Case No. 4D19-1164 (Fla. 4th DCA 2020) held that if a Borrower sends a cease and desist letter, it is a clear expression that the Borrowers would not cooperate and vitiated the requirement to conduct a face to face meeting. Accordingly, the Fourth District Court of Appeal reversed the involuntary dismissal, and remanded the proceedings. This case is not yet final, and subject to rehearing.
On January 31, 2020, the Second District Court of Appeal in HSBC Bank USA, N.A. v. Sherman, held “that as a dismissal without prejudice does not constitute an adjudication on the merits, in which Plaintiff did not need to send an additional notice of default letter before refiling.”
In reaching this decision, the Second District Court of Appeal cited to PNC Bank, N.A. v. Otero, 277 So. 3d 199 (Fla. 3d DCA 2019), where the the Court held that a dismissal without prejudice “does not constitute an adjudication on the merits” and that “following an involuntary dismissal without prejudice ‘there [is] no practical purpose in requiring an additional notice [of default].' ” Id. at 200-01 (alterations in original) (quoting Sill v. JPMorgan Chase Bank, Nat'l Ass'n, 182 So. 3d 851, 852-53 (Fla. 4th DCA 2016)). Because the instant complaint alleged the same breach as the previous complaint, HSBC was not required to send a new notice under paragraph 22 of the mortgage. See id. at 201 (“[As the first complaint was] dismissed without prejudice, . . . [the original] notice of default remained valid and a second notice of default was not required before filing the second complaint based on the same default.” (alterations in original) (quoting Sill, 182 So. 3d at 852-53)). This case is not yet final and is subject to rehearing.
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