Background

• Borrowers Jose and Jessica Nunez and Felipa Delrio executed an adjustable-rate promissory note and mortgage in favor of America’s Wholesale Lender; the note and mortgage were later assigned to OneWest Bank.
• Borrowers defaulted and OneWest sued to foreclose the mortgage and enforce the note.
• Borrowers defended, asserting among other things that the promissory note was not a negotiable instrument because it incorporated provisions of the mortgage (e.g., acceleration on transfer), which they argued made the note conditional.
• At trial the court concluded the note was non‑negotiable and entered an involuntary dismissal of OneWest’s foreclosure complaint on that basis.
• OneWest appealed, arguing the note remained negotiable despite referencing the mortgage for collateral/acceleration provisions and that, even if non‑negotiable, an assignee may still enforce the note subject to defenses against the assignor.
• The Fourth District reversed, holding the note’s reference to the mortgage for acceleration/collateral rights did not make it conditional or non‑negotiable under the UCC; the dismissal was reversed and the case remanded.

Issues

Key Cases Cited

• State v. Family Bank of Hallandale, 667 So. 2d 257 (Fla. 1st DCA 1995) (assignee of a nonnegotiable instrument takes subject to assignor’s equities and defenses)
• Holly Hill Acres, Ltd. v. Charter Bank of Gainesville, 314 So. 2d 209 (Fla. 2d DCA 1975) (incorporation of the mortgage terms ‘‘by this reference made a part hereof’’ rendered that note nonnegotiable)
• Means v. Clardy, 735 S.W.2d 6 (Mo. Ct. App. 1987) (assignee’s rights with respect to nonnegotiable instruments and defenses against enforcement)