St. Clair v. U.S. Bank National Association
173 So. 3d 1045
| Fla. Dist. Ct. App. | 2015Background
- St. Clair defaulted on a mortgage loan originally made by Lenders Direct Capital Corporation; U.S. Bank filed for foreclosure.
- The promissory note and mortgage were not indorsed to U.S. Bank; documents were placed in a trust with U.S. Bank as trustee and SLS was the servicer.
- U.S. Bank claimed standing as a "nonholder in possession" with the rights of a holder under Fla. Stat. § 673.3011(2).
- At a nonjury trial U.S. Bank relied on a pooling and servicing agreement, a default notice from SLS, and a fee schedule to prove standing.
- Trial court ruled for U.S. Bank; the appellate court reviewed standing de novo and found the evidence inadequate to show U.S. Bank acquired enforceable rights from Lenders Direct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether U.S. Bank had standing to enforce the note and mortgage | U.S. Bank: possession of documents in trust + pooling/servicing agreement and servicer notices confer rights as a nonholder in possession | St. Clair: mere possession and servicer paperwork do not show U.S. Bank acquired enforcement rights from a holder | Reversed: U.S. Bank failed to prove it received the instrument from a holder; possession and servicer documents were insufficient |
| Whether indorsement is required to be a holder | U.S. Bank: could be a nonholder in possession with holder rights without special indorsement | St. Clair: absent special or blank indorsement, cannot be a holder; must show transfer from holder | Court: without special/blank indorsement, standing requires proof of transfer from a holder; U.S. Bank did not prove this |
| Adequacy of servicer’s notice and pooling agreement to prove transfer | U.S. Bank: SLS servicing notice and PSA/paper trail demonstrate transfer and standing | St. Clair: these documents do not identify transferee or show who obtained enforcement rights | Court: servicer letter and PSA insufficient; they fail to identify who received the note or enforcement rights |
| Burden to prove chain of title/possession when instrument is unindorsed | U.S. Bank: possession plus trust paperwork satisfies showing | St. Clair: transferee must account for acquisition if instrument unindorsed | Court: transferee must prove the transaction by which it acquired the unindorsed instrument; U.S. Bank failed to meet burden |
Key Cases Cited
- McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So. 3d 170 (Fla. 4th DCA 2012) (holder status requires special or blank indorsement for non-originating possessor)
- Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122 (Fla. 4th DCA 2015) (servicer notice alone insufficient to establish enforcement rights)
- Murray v. HSBC Bank USA, 157 So. 3d 355 (Fla. 4th DCA 2015) (mere possession of instrument is inadequate to prove standing)
- Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128 (Fla. 4th DCA 2014) (standing in foreclosure reviewed de novo)
- Anderson v. Burson, 35 A.3d 452 (Md. 2011) (transferee of unindorsed instrument must prove transaction establishing possession)
- Withers v. Sandlin, 18 So. 856 (Fla. 1896) (longstanding rule precluding presumption of enforcement rights from servicing alone)