PennyMac Corp. v. Frost
214 So. 3d 686
| Fla. Dist. Ct. App. | 2017Background
- Borrower executed a 2007 note and mortgage in favor of Washington Mutual; the note bore a VOIDed blank indorsement by Washington Mutual and an allonge with an indorsement purporting to be by JPMorgan Chase (as successor by FDIC receiver).
- Borrower defaulted; PennyMac filed a foreclosure and produced the original note showing JPMorgan’s indorsement when the complaint was filed.
- Borrower moved for involuntary dismissal, arguing PennyMac failed to prove JPMorgan had the right to enforce the note when it transferred it to PennyMac.
- Trial court granted involuntary dismissal for lack of competent substantial evidence of PennyMac’s standing to enforce the note.
- On rehearing, appellate court reviewed standing de novo and examined whether JPMorgan’s indorsement was a valid blank indorsement that would make PennyMac a holder or whether it was an anomalous indorsement leaving PennyMac to prove chain-of-title rights.
- Court affirmed dismissal, holding PennyMac failed to prove JPMorgan had enforceable rights at transfer and therefore PennyMac could not derive standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether possession of the original note with JPMorgan indorsement established PennyMac as a holder entitled to foreclose | PennyMac: possession of the original note with indorsement irrefutably established it as holder (standing) | Borrower: JPMorgan’s indorsement did not make it a holder because original lender’s indorsement was VOID; PennyMac must prove transferor’s rights | Held: JPMorgan’s indorsement was anomalous, not a blank indorsement; PennyMac was not a holder and did not establish standing |
| Whether PennyMac could rely on the presumption that JPMorgan’s indorsement was authentic and authorized | PennyMac: signature on indorsement is presumed authentic/authorized under UCC, supporting its case | Borrower: even if authentic, the legal effect (holder status) of the indorsement is determined by the note’s face and UCC rules | Held: Presumption of authenticity does not change the legal effect; the indorsement’s form showed it was anomalous, not negotiative to create holder status |
| Whether PennyMac could establish standing as a nonholder in possession with holder rights via chain of transfers | PennyMac: possessing the original indorsed note allowed enforcement rights | Borrower: PennyMac must prove chain of transfers starting with a transferor who had enforceable rights; cannot derive rights from a transferor that had none | Held: PennyMac failed to prove JPMorgan had enforceable rights at transfer; under the shelter rule it could not derive standing; dismissal affirmed |
Key Cases Cited
- Boyd v. Wells Fargo Bank, N.A., 143 So.3d 1128 (Fla. 4th DCA 2014) (standard of review for standing reviewed de novo)
- U.S. Bank Nat’l Ass’n v. Clarke, 192 So.3d 620 (Fla. 4th DCA 2016) (standing via entitlement to enforce under UCC)
- Kenney v. HSBC Bank USA, Nat’l Ass’n, 175 So.3d 377 (Fla. 4th DCA 2015) (possession of original note with blank or special indorsement can establish standing)
- Murray v. HSBC Bank USA, 157 So.3d 355 (Fla. 4th DCA 2015) (plaintiff must prove chain of transfers and transferor’s right to enforce to show nonholder-in-possession standing)