226 So. 3d 920
Fla. Dist. Ct. App.2017Background
- Wells Fargo appealed a trial-court order enforcing an oral settlement reached at mediation with homeowners Larry and Margaret Richards and awarding attorneys’ fees.
- No written settlement was signed; Wells Fargo later produced a written loan-modification it asked the Richards to sign, which they refused because it differed from their claimed terms.
- At the enforcement hearing the Richards testified to vague, favorable oral modification terms (e.g., greatly reduced payments, ~40-year term); Wells Fargo presented no witness from mediation.
- The trial court credited the Richards’ testimony and enforced the alleged oral modification.
- The Fourth District reversed, holding oral modification of a credit agreement is barred by the Banking Statute of Frauds and that full performance did not remove the agreement from the statute’s reach.
Issues
| Issue | Plaintiff's Argument (Richards) | Defendant's Argument (Wells Fargo) | Held |
|---|---|---|---|
| Enforceability of oral mediation settlement modifying loan | Oral settlement at mediation permanently modified loan; trial court should enforce | Oral credit modifications are unenforceable without a signed writing | Reversed: oral modification unenforceable under Banking Statute of Frauds |
| Applicability of general statute of frauds (1-year rule) | Not applicable because alleged performance or terms removed oral agreement from statute | Oral multi-decade modification is within statute (not performable within 1 year) | Held statute of frauds applies; oral 40-year modification required writing |
| Applicability of Banking Statute of Frauds (§ 687.0304) | Homeowners sought to maintain action on a credit agreement based on oral promise | Statute bars actions on credit agreements unless written, signed, and stating terms | Held statute applies to loan modifications and bars enforcement of oral modification |
| Use of equitable doctrines (full/complete performance or estoppel) to avoid statute | Full performance or equitable estoppel removes oral agreement from statute’s reach | Permitting offensive use of equitable doctrines would defeat statute’s purpose; no full performance shown | Held equitable doctrines do not salvage the oral modification here; no full performance proved |
Key Cases Cited
- Hiatt v. Vaughn, 430 So. 2d 597 (Fla. 4th DCA 1983) (recognizing full-performance exception to statute of frauds in some contexts)
- Metro Bldg. Materials Corp. v. Republic Nat’l Bank of Miami, 919 So. 2d 595 (Fla. 3d DCA 2006) (permitting equitable defenses to Banking Statute of Frauds in limited defensive contexts)
- Vargas v. Deutsche Bank Nat’l Trust Co., 104 So. 3d 1156 (Fla. 3d DCA 2012) (loan modification is a credit agreement within Banking Statute of Frauds)
- Brenowitz v. Central Nat’l Bank, 597 So. 2d 340 (Fla. 2d DCA 1992) (motion to enforce oral credit agreement improperly seeks to evade statute)
- Ocwen Loan Servicing, LLC v. Delvar, 180 So. 3d 1190 (Fla. 4th DCA 2015) (oral mortgage modification subject to statute of frauds when not performable within one year)