Liberty Home Equity Solutions, Inc. v. Raulston
206 So. 3d 58
| Fla. Dist. Ct. App. | 2016Background
- Patsy Raulston took a HUD-insured home equity conversion loan from Liberty in March 2009, memorialized by a note and mortgage; Liberty agreed to advance up to $286,500.
- Raulston defaulted by failing to pay property taxes and hazard insurance; servicer notified her of the breach and cure requirements.
- Liberty requested HUD approval to accelerate and foreclose; HUD’s servicer returned a form letter with the “Request APPROVED” box checked but including ambiguous language stating the request was in "pending status" and listing missing documentation (without specifying any item).
- Liberty filed a one-count foreclosure complaint in January 2014 alleging default, HUD approval to accelerate, amount due, and compliance with conditions precedent.
- At a non-jury trial Liberty introduced the note, mortgage, acceleration/repayment notices, HUD correspondence, and loan balance; after Liberty rested Raulston moved for involuntary dismissal, which the trial court granted with prejudice.
- The trial court found (among other things) that HUD approval and HUD rules were not satisfied, the default was at most technical, and equity favored dismissal; Liberty appealed.
Issues
| Issue | Plaintiff's Argument (Liberty) | Defendant's Argument (Raulston) | Held |
|---|---|---|---|
| Whether Liberty established a prima facie case for foreclosure | Admitted note, mortgage, evidence of default, acceleration, outstanding balance, and a HUD approval letter — sufficient to meet prima facie requirements | Liberty failed to satisfy conditions precedent because HUD approval to foreclose was not obtained | Reversed: viewing evidence in favor of Liberty, reasonable inference supports that HUD’s servicer approved the request; directed verdict should not have been entered for defendant |
| Proper standard for ruling on involuntary dismissal | Court should view evidence and inferences in favor of the nonmoving party (Liberty) | Trial court improperly weighed evidence against plaintiff and resolved conflicts against plaintiff | Court applied de novo review; conflicts must be resolved for nonmovant; dismissal improper |
| Whether failure to pay taxes/insurance was a material breach justifying acceleration and foreclosure | Failure to pay taxes/insurance was a material breach under the mortgage; lender not required to "roll up" amounts into line of credit if borrower’s credit line exceeded | Trial court held the breach was not material and that lender should have rolled amounts into the credit line | Reversed trial court on this point: mortgage required borrower to pay charges unless lender paid or charged to line of credit; Liberty was not obliged to roll-up and testified borrower exceeded credit line |
| Effect of ambiguous HUD form letter on condition precedent compliance | The checked "Request APPROVED" box and witness testimony permit a reasonable inference of HUD approval; any ambiguity should be resolved for plaintiff | Ambiguous language showed approval was pending or missing documentation — so condition precedent unmet | Ambiguity must be resolved in favor of nonmovant; HUD letter, construed for Liberty, sufficiently established substantial compliance with condition precedent |
Key Cases Cited
- Deutsche Bank Nat'l Tr. Co. v. Huber, 137 So.3d 562 (describing involuntary dismissal in non-jury trial as akin to directed verdict review)
- Deutsche Bank Nat'l Trust Co. v. Clarke, 87 So.3d 58 (discussing standard for directed verdict/involuntary dismissal)
- Ernest v. Carter, 368 So.2d 428 (setting elements required for prima facie foreclosure case)
- Kelsey v. SunTrust Mortg., Inc., 131 So.3d 825 (note, mortgage, acceleration letter, and debt evidence satisfy prima facie)
- Blum v. Deutsche Bank Tr. Co., 159 So.3d 920 (failure to comply with condition precedent requires dismissal)
- Fed. Nat’l Mortg. Ass’n v. Hawthorne, 197 So.3d 1237 (foreclosure plaintiff need only substantially comply with conditions precedent)
- Caraccia v. U.S. Bank Nat’l Ass’n, 185 So.3d 1277 (breach of condition precedent does not bar enforcement absent prejudice)
- Boca Golf View, Ltd. v. Hughes Hall, Inc., 843 So.2d 993 (on involuntary dismissal, courts must view evidence and inferences in favor of nonmoving party)