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PLG Win: Bankruptcy Court Affirms Debtor Cannot Modify Plan & Vacate Confirmation Order Nearly Seven Years Later
The United States Bankruptcy Court for the Middle District of Florida solidified that a debtor is unable to modify a plan and vacate a confirmation order, nearly seven years after the plan was confirmed, to strip a mortgage creditor’s lien.
PLG, via its attorney Seth J. Greenhill, Esq., sustained a significant victory for its client in bankruptcy court. On August 3, 2023, the Court issued its published opinion, In re Gilbert, 2023 Bankr. LEXIS 1952, whereby the Court correctly found that the Debtor was unable to use §1329 to modify a plan to strip a junior lien when plan payments were completed; and (2) the Debtor could not use §105(a) to vacate a confirmation order nearly seven years after the order was entered. It is worth noting that PLG took an aggressive approach by taking the Debtor’s deposition (i.e. Rule 2004 Examination) in order to lock in her testimony and show that she knew about the lien, yet failed to include it. This strategy, which Attorney Greenhill has successful deployed in past litigation, proved useful in this case and was, ultimately, advantageous to the Client in that it secured pivotal testimony later used by Creditors’ counsel.
In response to Hurricane Ian, PLG has closed its Tampa, Florida office effective Wednesday, September 28 until further notice for the safety of our employees. At this time, the firm’s Florida operations remain unimpacted and general business continues uninterrupted via our office in Tallahassee and remote work authorization for potentially impacted employees. PLG's servers are protected, operational, and data redundant per our Business Continuity Plan. At this time, the firm anticipates remaining fully operational and available for client interfacing with little to no impact on day-to-day operations.
PLG is also monitoring court closures in response to the hurricane and will update clients as needed regarding rescheduled hearings, trials, sales, and other delays related to the impact of Hurricane Ian. Click here to see a list of current closures provided by our vendor Provest. Everyone impacted and those in the path of Hurricane Ian are in our thoughts and prayers.
In an opinion affirming in part and reversing in part, Florida's Second District Court of Appeal found that a Trial Judge’s Order went too far when it forbade the borrower in a foreclosure case, who had surrendered the real property at issue in an earlier bankruptcy, to contest the foreclosure “in any manner” due to that bankruptcy surrender. In reversing in part, the Court of Appeal held that there are circumstances where a borrower may be allowed to challenge some aspects of a foreclosure case; for example, in the amounts due and owing, or other limited circumstances that may have arisen post-bankruptcy. Importantly, however, in affirming, the Second District Court of Appeal also ruled that surrender in a bankruptcy case means that in a subsequent foreclosure case a borrower is not entitled to challenge the lender’s own entitlement to foreclose. “Because the debtor’s interest has been surrendered, the debtor is no longer entitled to challenge the entitlement to foreclose the debtor’s former legal interest.” Note that this opinion is not final yet.
Today, the Fourth District Court of Appeal for Florida in Wells Fargo Bank, N.A. v. Tan, Case No. 4D20-613, held that Fla. Stat. 702.036 barred the Court from granting relief as it related to a Senior Mortgagee seeking to vacate a judgment that was entered against them by a Junior Mortgagee. For a little more background on this holding, “a non-party purchased the real property at issue and executed a mortgage in favor of Bear Stearns Residential Mortgage Corporation. Bear Stearns assigned the mortgage to Wells Fargo. The non-party later sold the property to Chi Peng Tan, who executed a mortgage in favor of First Magnus Financial Corporation.
First Magnus filed a foreclosure complaint against multiple defendants, including Tan and Wells Fargo. A judgment was entered that foreclosed all interests, including the interest held by Wells Fargo. The record shows that Wells Fargo recorded its mortgage before First Magnus recorded its mortgage.”
This is case is not yet final.
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 bank's 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.
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