Thursday, November 20, 2014

FYI: Fla App Ct Requires Evidence of Adequate Protection Against Other Claimants to Lost Note, Vacates Foreclosure on Lost Note

The District Court of Appeal of the State of Florida, Fifth District, recently held that a mortgagee was not entitled to final judgment of foreclosure where the mortgagee failed to introduce any evidence of adequate protection for its lost note at trial, as required under Fla. Stat. 673.3091.


In so ruling, the appellate court followed the Florida Third District Court of Appeals’ decision in Guerrero v. Chase Home Fin., LLC, 83 So. 3d 970, 974 (Fla. 3d DCA 2012) and reversed the lower court’s granting of final judgment of foreclosure in favor of the mortgagee and against the borrower, and remanded the matter for establishment of the lost note and mortgage.


A copy of the opinion is available at:


The mortgagee filed a complaint against the borrower seeking foreclosure of a mortgage on real property.


At trial, the mortgagee advised the trial court and the borrower that it was not in possession of the loan documents and that it intended to re-establish the note and mortgage through testimony at trial. The mortgagee then presented testimony related to the issue of how the loan documents became lost and to the issue of the authenticity of its copies of the loan documents.


The trial court awarded final judgment of foreclosure in favor of the mortgagee.  The borrower appealed.


On appeal, the borrower argued that the trial court erred in concluding that the mortgagee sustained its burden of proving that it possessed standing to proceed on its lost note theory because the mortgagee failed to submit any evidence on the issue of adequate protection.


As you may recall Fla. Stat. 673.3091 governs the enforcement of lost, destroyed or stolen instruments, and provides in pertinent part:


(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, s. 673.3081 [proof of signatures and status as holder in due course] applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.


Fla. Stat. 702.11(1) explains the concept of adequate protection, and provides in pertinent part:


(1) In connection with a mortgage foreclosure, the following constitute reasonable means of providing adequate protection under s. 673.3091, if so found by the court:

(a) A written indemnification agreement by a person reasonably believed sufficiently solvent to honor such an obligation;

(b) A surety bond;

(c) A letter of credit issued by a financial institution;

(d) A deposit of cash collateral with the clerk of the court; or

(e) Such other security as the court may deem appropriate under the circumstances.


Applying these provisions, the appellate court found the mortgagee failed to present any evidence on the issue of adequate protection.


Accordingly, it reversed the foreclosure judgment and remanded the matter to the trial court for establishment of the lost note and mortgage.






Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
(312) 551-9320
(312) 284-4751
(312) 493-0874


Admitted to practice law in Illinois



               McGinnis Wutscher Beiramee LLP





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