Donna Murray and Marc Murray v. HSBC Bank USA
157 So. 3d 355
| Fla. Dist. Ct. App. | 2015Background
- Borrowers (Donna and Marc Murray) executed a mortgage and note payable to Option One Mortgage Corporation (California). Payments were missed and HSBC filed a foreclosure complaint asserting it owned and held the note.
- After filing, an assignment dated April 3, 2009 (effective Jan. 24, 2009) from Sand Canyon (f/k/a Option One Mortgage Corp.) to HSBC was executed; another assignment dated Oct. 5, 2010 (effective Apr. 23, 2007) was later executed. HSBC dismissed its lost-note count and produced the original note (payable to Option One California) without an indorsement.
- HSBC amended to allege it was a nonholder in possession with the rights of a holder under Fla. Stat. § 673.3011 and proceeded to non-jury trial, offering testimony from an Ocwen loan analyst, the PSA, note, mortgage, payment history, and demand letter. Assignments were not admitted into evidence.
- The PSA named ACE as Depositor, Option One Mortgage Corporation (as servicer), Wells Fargo as master servicer, and HSBC as trustee; the PSA did not reference Option One California specifically.
- HSBC argued the PSA and servicer-successor testimony connected the chain from the original payee to ACE and thence to HSBC; borrowers argued HSBC failed to prove any transfer of enforcement rights from the original payee (Option One California) to ACE or HSBC.
- The trial court entered final judgment of foreclosure for HSBC; the Fourth District reversed, holding HSBC failed to prove the missing link in the chain of transfers and therefore lacked standing to foreclose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did HSBC have standing to foreclose? | HSBC: as trustee and nonholder in possession, PSA and servicing records show it has rights of a holder. | Borrowers: HSBC never proved Option One California conveyed the note or enforcement rights to ACE or HSBC. | Reversed — HSBC failed to prove standing. |
| Can possession alone (without indorsement) establish enforcement rights? | HSBC: possession plus PSA/servicing chain suffices to be a nonholder with rights of a holder. | Borrowers: possession of an unindorsed note is insufficient absent proof of each prior transfer. | Court: possession alone is insufficient; transferee must prove chain from the holder. |
| Does servicer status in a PSA transfer note-holder rights? | HSBC: "Option One" as defined in PSA and servicer relationships imply transfer of rights to ACE/HSBC. | Borrowers: PSA establishes servicer duties but does not show servicer conveyed ownership or enforcement rights. | Court: PSA servicer role does not prove conveyance of enforcement rights. |
| Was the PSA sufficient evidence to prove ACE derived rights from Option One California? | HSBC: PSA and loan schedule referencing the loan link ACE/Option One to HSBC. | Borrowers: PSA parties did not include Option One California as payee; no evidence ACE received rights from Option One California. | Court: PSA alone did not prove ACE derived rights from Option One California; missing transfer fatal. |
Key Cases Cited
- Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965 (Fla. 4th DCA 2013) (standard of de novo review and standing requirement in foreclosure)
- McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170 (Fla. 4th DCA 2012) (holder status or special indorsement required to show standing)
- Mazine v. M & I Bank, 67 So. 3d 1129 (Fla. 1st DCA 2011) (nonholder in possession may have rights of a holder but must show entitlement)
- Anderson v. Burson, 35 A.3d 452 (Md. 2011) (transferee of unindorsed instrument must prove each prior transfer; shelter rule limits derivative rights)