Gorel v. Bank of New York Mellon
165 So. 3d 44
| Fla. Dist. Ct. App. | 2015Background
- Adiel Gorel executed a promissory note for $176,168 and a mortgage naming Novastar as lender; MERS was listed as Novastar’s nominee.
- Novastar’s loan servicer sent a default letter demanding cure by February 17, 2010; Gorel did not cure and Bank sued to foreclose.
- Bank’s complaint included copies of the note (the attached copy lacked indorsements), the mortgage, and an assignment of mortgage from MERS to Bank (the assignment was not admitted at trial).
- At trial Bank introduced the original note, which contained an undated special indorsement from Novastar to JP Morgan Chase, N.A., as trustee for Novastar certificates — not to Bank.
- Bank’s sole witness testified generically that Bank was entitled to enforce the note but did not establish when Bank obtained the note or explain the conflicting indorsements.
- The trial court entered final judgment for Bank; on appeal the court reversed, finding Bank failed to prove standing and also addressed a technical defect in the cure notice under paragraph 22 of the mortgage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | Bank argued it owned/held the note and mortgage (assignment to Bank attached to complaint) | Gorel/FLCA argued Bank did not hold the note when suit was filed; original note was indorsed to Chase, not Bank | Reversed: Bank failed to prove standing — evidence showed special indorsement to Chase and no proof Chase indorsed to Bank or that Bank acquired note pre-suit |
| Effect of special indorsement | Bank contended possession + general testimony sufficed | Defendants pointed to special indorsement to Chase, requiring payee indorsement for negotiation | Court held special indorsement to Chase meant Chase, not Bank, was proper party unless Chase indorsed further; no record evidence of such indorsement |
| Compliance with mortgage paragraph 22 (notice) | Bank argued cure notice substantial compliance and no prejudice since borrower didn’t attempt cure | Defendants argued notice gave only 29 days instead of required 30 days under paragraph 22 | Court found notice defective (29 days) but non-prejudicial; lack of prejudice meant defendants could not use the defect to defeat enforcement, though standing failure was dispositive |
| Admission of assignment evidence | Bank relied on assignment attached to complaint to show ownership | Defendants noted assignment was never admitted at trial and witness did not testify about it | Court emphasized assignment was not admitted and witness testimony failed to establish timing of Bank’s ownership; absence of admissible proof undermined Bank’s standing |
Key Cases Cited
- McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170 (party must show it held/owned note at time complaint filed)
- Deutsche Bank Nat'l Trust Co. v. Lippi, 78 So.3d 81 (holder of note and mortgage has standing to foreclose)
- Lizio v. McCullom, 36 So.3d 927 (plaintiff must present evidence it owns/holds the note and mortgage)
- Riggs v. Aurora Loan Servs., LLC, 36 So.3d 932 (note must bear special indorsement in favor of plaintiff or blank indorsement if payee differs)
- Rigby v. Wells Fargo Bank, N.A., 84 So.3d 1195 (assignment or affidavit of ownership may establish standing)
- Sosa v. U.S. Bank Nat'l Ass'n, 153 So.3d 950 (trial testimony as to date bank became owner can substitute for affidavit)
- Dixon v. Express Equity Lending Grp., LLLP, 125 So.3d 965 (special indorsement to another party defeats filer’s standing)
- Khan v. Bank of Am., N.A., 58 So.3d 927 (indorsement to another bank defeats standing as matter of law)
- Lacombe v. Deutsche Bank Nat'l Trust Co., 149 So.3d 152 (negotiation of specially indorsed note requires named payee’s indorsement)
- Jelic v. LaSalle Bank Nat'l Ass'n, 160 So.3d 127 (special indorsement may show that a different entity is the proper foreclosing party)
- DiSalvo v. SunTrust Mortg., Inc., 115 So.3d 438 (mortgagee must prove compliance with mortgage terms prior to foreclosure)
- Konsulian v. Busey Bank, N.A., 61 So.3d 1283 (contracts construed by plain language as bargained)
- Allstate Floridian Ins. Co. v. Farmer, 104 So.3d 1242 (breach of condition precedent is a defense only if it causes prejudice)