225 So. 3d 264
Fla. Dist. Ct. App.2017Background
- Homeowners were sued in foreclosure after default on a promissory note secured by their home; the complaint included a copy of the note showing a blank endorsement executed by Countrywide/"America’s Wholesale Lender."
- The original servicer filed the foreclosure complaint and later filed the original, blank-endorsed note with the court.
- Two years after filing, the original servicer moved to substitute the note owner as plaintiff; the trial court granted substitution.
- At a non-jury trial the note owner introduced the original blank-endorsed note and presented testimony from a current servicer employee that the current servicer was authorized by a limited power of attorney to service and pursue the loan.
- Homeowners moved for involuntary dismissal arguing lack of standing (disputing the endorsement, timing of endorsement, and that the original servicer filed in its own name).
- The trial court granted judgment for the homeowners on grounds not argued by defendants: that there was insufficient proof the ability to prosecute was transferred after the complaint and that substitution created a procedural defect; the note owner appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the original servicer had standing to commence foreclosure | Original servicer possessed the blank-endorsed note when it filed, so it was the holder with standing | Homeowners argued defects in endorsement and that original servicer lacked standing | Court held original servicer had physical possession of the blank-endorsed note at filing and thus had standing |
| Whether substitution to the note owner cured standing at trial | Substitution conveyed standing; note owner introduced original note at trial | Homeowners argued substitution and servicing transfers raised authorization issues | Court held substitution conveyed standing and note owner had standing at trial after producing the original note |
| Whether servicer possession (physical vs. constructive) affects holder status | Note owner: servicer possession on owner’s behalf does not defeat holder status; agency/constructive possession suffices | Homeowners: servicer possession could undermine owner’s standing | Court held physical possession by servicer (or constructive possession by owner) is sufficient when agency exists; possession element met |
| Whether trial court could grant dismissal on grounds not raised by parties | Note owner: trial court erred in relying on unraised procedural/transfer-of-authority grounds | Homeowners: relied on different standing defects at trial | Court reversed trial court and remanded for entry of judgment for note owner; trial court erred in relying on other grounds |
Key Cases Cited
- Caraccia v. U.S. Bank, Nat’l Ass’n, 185 So.3d 1277 (Fla. 4th DCA 2016) (servicer’s physical possession does not negate bank’s constructive possession; agency can satisfy possession element)
- Tremblay v. U.S. Bank, Nat’l Ass’n, 164 So.3d 85 (Fla. 4th DCA 2015) (distinguished where servicer, not bank, was sole holder and only proper plaintiff)
- Ortiz v. PNC Bank, Nat’l Ass’n, 188 So.3d 923 (Fla. 4th DCA 2016) (attaching a copy of the note to the complaint and later filing the original in the same condition establishes possession at the time of filing)
- Jallali v. Christiana Tr., 200 So.3d 149 (Fla. 4th DCA 2016) (a substituted plaintiff can acquire standing if the original party had standing)