Powers v. HSBC Bank USA, N.A.
202 So. 3d 121
Fla. Dist. Ct. App. 6th2016Background
- Jeffrey and Tawnya Powers were defendants in a foreclosure action filed by HSBC Bank USA, N.A. acting as trustee for Fremont Home Loan Trust 2006‑C.
- HSBC alleged in its complaint that it was the holder of the mortgage note but did not attach the note to the complaint.
- At trial HSBC introduced the original note and called Tonya Tillman (Ocwen loan analyst). Tillman testified about prior servicers and that the note listed Fremont as lender.
- HSBC introduced the pooling and servicing agreement (PSA) for the trust but the PSA did not identify the Powers’ loan; Tillman could not say when or whether the loan was transferred into the trust.
- There was an acknowledged undated/blank endorsement issue: HSBC’s counsel claimed an undated blank endorsement existed, but the original note admitted into evidence contained no endorsement, and the court excluded testimony about the endorsement date as irrelevant.
- The trial court entered a final judgment of foreclosure for HSBC; the Second District reversed, holding HSBC failed to prove it had standing when the complaint was filed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing at time of filing | HSBC: it was entitled to enforce the note (holder) when suit was filed via transfer into the trust | Powers: HSBC did not hold or possess the note and lacked right to enforce at filing | Reversed: HSBC failed to prove it held the note or had enforcement rights when complaint filed |
| Proof of holder status | HSBC: blank endorsement and inclusion of note in trust gave holder status | Powers: no evidence the Powers’ loan was included in the PSA and no dated endorsement showing possession at filing | Held: mere PSA and testimony insufficient absent evidence loan was in trust at filing or possession with endorsement |
| Equitable transfer via PSA | HSBC: equitable transfer of note occurred when assets were transferred to trustee under PSA | Powers: PSA did not list the loan and witness could not prove transfer date into trust | Held: equitable transfer not proven because loan’s inclusion in trust not established |
| Admissibility/relevance of endorsement timing | HSBC: existence of blank endorsement sufficient | Powers: needed proof endorsement/execution date to show possession at filing | Held: court erred in allowing HSBC to avoid proving that endorsement/possession existed at filing; lacking proof, standing not established |
Key Cases Cited
- Corrigan v. Bank of Am., N.A., 189 So. 3d 187 (Fla. 2d DCA) (standing must exist when complaint filed)
- St. Clair v. U.S. Bank Nat'l Ass'n, 173 So. 3d 1045 (Fla. 2d DCA) (who qualifies as person entitled to enforce negotiable instrument)
- McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So. 3d 170 (Fla. 4th DCA) (holder status and effect of endorsements)
- Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122 (Fla. 4th DCA) (equitable interest vests by delivery absent endorsement)
- Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308 (Fla. 2d DCA) (must prove possession of original note with blank endorsement at time complaint filed)
- Stone v. BankUnited, 115 So. 3d 411 (Fla. 2d DCA) (standing established where witness proved acquisition of assets prior to filing)