Citibank, N.A. v. Olsak
208 So. 3d 227
| Fla. Dist. Ct. App. | 2016Background
- In 2006 Orion Bank made a $540,000 loan to Martin Olsak, evidenced by a promissory note and secured by a mortgage on Key West property.
- The note was endorsed by Wells Fargo as Orion’s attorney-in-fact and then endorsed in blank; a 2006 assignment showed Orion assigned the loan to Wells Fargo the day it was originated.
- The Trust (Citibank, N.A., trustee for BSARM 2007-2) produced the original endorsed note and a Wells Fargo screenshot showing placement of the loan into the Trust in June 2007 and sued to foreclose in 2009 after Olsak defaulted.
- Olsak’s sole trial witness, Richard Kahn (a non-lawyer expert), testified that the Trust could not acquire a blank-endorsed note under the Trust documents, that endorsements/assignment were invalid or noncompliant, and that REMIC/IRS rules precluded inclusion of such notes.
- The trial court relied exclusively on Kahn’s testimony and entered final judgment dismissing the Trust’s foreclosure complaint for lack of standing; Citibank appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether foreclosure plaintiff (Trust) had standing at case inception | Trust produced possession of the original note endorsed in blank and assignment evidence showing placement into the Trust | Olsak argued Trust never acquired an interest because Trust documents/endorsements were noncompliant and REMIC rules barred transfer | Reversed: trial court improperly relied on expert’s legal conclusions; standing must be decided on competent, substantial evidence |
| Admissibility / proper weight of expert testimony on legal issues | N/A (Trust objected at trial) | Olsak introduced expert Kahn to opine that Trust lacked interest based on document interpretation and tax rules | Court held experts may not give legal conclusions; trial court erred by basing legal determination solely on the expert’s legal opinions |
| Whether borrower can challenge Trust-document compliance to defeat standing | N/A | Olsak relied on Trust documents and REMIC rules to challenge validity of Trust’s acquisition | Court reiterated borrowers generally lack standing to enforce or attack nonparty trust documents; such challenges are limited unless supported by competent evidence |
| Whether IRS/REMIC tax analysis by expert is probative of standing | N/A | Kahn asserted tax consequences would prevent Trust from owning blank-endorsed notes | Court found such legal/tax opinions irrelevant absent factual foundation and not dispositive of whether Trust held the note at inception |
Key Cases Cited
- Reynolds v. Nationstar Loan Servs., LLC, 190 So. 3d 219 (Fla. 4th DCA) (standing is a legal issue reviewed de novo)
- Verneret v. Foreclosure Advisors, LLC, 45 So. 3d 889 (Fla. 3d DCA) (trial-court factual findings on standing upheld only if supported by competent, substantial evidence)
- McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170 (Fla. 4th DCA) (possession/endorsement or assignment required for non-payee to have standing)
- Wells Fargo Bank, N.A. v. Morcom, 125 So. 3d 320 (Fla. 5th DCA) (person entitled to enforce includes holder of instrument)
- Palm Beach Cty. v. Town of Palm Beach, 426 So. 2d 1063 (Fla. 4th DCA) (expert witnesses should not give legal conclusions)
- Thundereal Corp. v. Sterling, 368 So. 2d 923 (Fla. 1st DCA) (legal conclusions are for the court, not witnesses)
- Devin v. City of Hollywood, 351 So. 2d 1022 (Fla. 4th DCA) (reversible error where trial judge relies on expert testimony to decide questions of law)
- Castillo v. Deutsche Bank Nat’l Trust Co., 89 So. 3d 1069 (Fla. 3d DCA) (borrowers cannot generally defeat standing by attacking trust documents to which they are not parties)