Van Ness Attorneys

GLASS IS SHATTERED (for now)

In the event that the borrower prevails in a foreclosure case, servicers need to minimize their exposure to prevailing party attorney’s fees. One strategy is, if applicable, using the “standing” defense premised on the fact if the plaintiff did not have standing to foreclose, they cannot in turn use the mortgage agreement fee provision(s) against them.

The above standing argument is developing and has been tested in a number of appellate actions, one of which had reached the Florida Supreme Court. At the district court of appeal level in Nationstar v. Glass, 219 So. 3d 896 (Fla. 4th DCA 2019), the court had agreed with the servicer and found that the borrower’s having prevailed on standing meant they was no privity of contract and they were estopped from claiming they were entitled to contractual attorney’s fees.

The case went up to the Florida Supreme Court as Glass v. Nationstar Mortg., LLC, Case No. SC17-1387 (Fla. Jan. 4, 2019). The Court reversed the district court of appeal reasoning that the contract may have been unenforceable as opposed to being nonexistent between the parties. This opinion led to a rush to distinguish the facts at issue in multiple trial and appellate cases throughout the state.

However, the Florida Supreme Court had revisited its opinion. Today, April 18, 2019, the Florida Supreme Court announced that its opinion is withdrawn and a substitute opinion would stand in its place. That substitute opinion expresses the Court “initially accepted review of the decision of the Fourth District Court of Appeal in Nationstar Mortgage LLC v. Glass, 219 So. 3d 896 (Fla. 4th DCA 2017), based on express and direct conflict….” The Court then explains that, “Upon further consideration, we conclude that jurisdiction was improvidently granted.”

Inasmuch as there was no conflict jurisdiction for the review, the Court dismissed the proceeding. Because the original opinion was substituted with a dismissal for lack of jurisdiction, there is no longer a Florida Supreme Court decision of the matter. The original district court opinion in Glass may once again be relied on as authority. Servicers should note that the arguments advanced by the Florida Supreme Court in its January opinion have not been found invalid; instead, the Court has provided that it should not have issued its opinion in this case. In the future, the Court may in fact find that it has jurisdiction to issue a substantially similar opinion, once again causing greater uncertainty with regard to fee liability.

Van Ness Attorneys

COURT EASES EVIDENTURY BURDEN FOR PLAINTIFFS

Admissibility is a key question in foreclosure cases. Authenticating documents for admission may complicate a plaintiff’s ability to prevail at trial. The Second District Court of Appeal has explained that loan modification agreements and various other documents are self-authenticating, thus easing the process of admission.

In foreclosure trials, the plaintiff is normally correct about most of the facts: “There is a note.” “The borrower signed a mortgage.” “The borrower breached by failing to make required payments.” “A breach letter was sent.” “The payment history and related documents reflect the amounts due and owing under the terms of the note and mortgage.”

Apart from the muddled issue of standing, the key issue in a case is normally focused on whether the servicer’s documentary evidence is admitted by the court. Admissibility involves two questions: Is the document authentic? Is the document admissible? Each question is equally important.

Authentication or identification requires that a party present sufficient evidence to support a finding that the matter in question is what its proponent claims. However, documents which are self- authenticating are not subject to this rule. While it has been understood that certain documents, including the note, are “self-authenticating” within the meaning of section 90.902, Florida Statutes, the scope of documents subject to the self-authentication rule has been less clear.

In Wells Fargo Bank, N.A. v. Quest Systems, LLC, 2D17-1184 (Fla. 2d DCA Apr. 3, 2019), the court clarified this issue. The court highlighted the fact that the statute provides that all documents “relating to” commercial paper are self-authenticating. Based on this proposition, the court found that a loan modification agreement, being related to the note, was self-authenticating. Other documents that relate to the note may be similarly self-authenticating, removing one of the barriers to admission of the evidence and, thus, judgment in favor of plaintiff.