Sunday, April 12, 2015

FYI: Fla App Ct (4th DCA) Reverses Judgment in Foreclosure Action, Because Prior Action Dismissed With Prejudice By Operation of Law

The District Court of Appeal of Florida, Fourth District, which includes Broward and Palm Beach Counties, recently reversed a mortgage foreclosure judgment in the bank’s favor because the bank’s prior foreclosure action had been dismissed with prejudice by operation of law, and was thus an adjudication on the merits, barring the second foreclosure action based on the same default under the doctrine of res judicata.

 

The Court held that the mortgagee was required to provide a new notice of breach of the mortgage agreement to support its foreclosure complaint in the second action, which the mortgagee did not do.

 

A copy of the opinion is available at:  http://www.4dca.org/opinions/April%202015/04-08-15/4D13-4825.op.pdf

 

The mortgagee sent a default and acceleration letter to the borrower and filed suit to foreclosure the mortgage shortly thereafter. The borrower moved to dismiss, and trial court granted the motion because the complaint was not verified or signed under oath, giving the bank 30 days to amend.

 

The bank did not file an amended complaint within the time allowed.  The borrower again moved to dismiss. Following a hearing, the trial court entered an order giving the bank an additional 20 days to amend, which also contained language that if the mortgagee failed to comply, the case would be dismissed without further notice or hearing. The mortgagee again failed to file an amended complaint within the time allotted, and the trial court dismissed the complaint pursuant to Rule 1.420(b) because the mortgagee did not timely file an amended complaint.

 

The mortgagee then filed a second foreclosure action with the same default date that was reflected in the first complaint. The borrower raised res judicata as a defense, arguing that because the mortgagee’s second action was barred because it was predicated on the same default as the dismissed complaint. The trial court disagreed, interpreting the order dismissing the first case as having been “without prejudice” and not an adjudication on the merits, and entered a final judgment in the banks’ favor.

 

On appeal, the Fourth District Court of Appeal looked to the plain language of Rule 1.420(b), which provides that a dismissal operates as an adjudication on the merits unless the court in its order of dismissal provides otherwise or the case is dismissed for lack of jurisdiction, improper venue or lack of an indispensable party.  In other words, when an order of dismissal adjudicates a case on the merits, and not contrary indication is provided, this means the case is dismissed “with prejudice.”

 

Because the order dismissing the first action stated that the dismissal was pursuant to Rule 1.420(b) for failure to file an amended complaint within the time allowed, was not based on lack of jurisdiction, improper venue or lack of an indispensable party, and did not expressly state that the dismissal was not intended to be an adjudication on the merits, the dismissal was “with prejudice” or an adjudication on the merits.

 

Moreover, because the mortgagee’s second foreclosure action was based on the same default as the first action, the Appellate Court held it was barred by the doctrine of res judicata under Singleton v. Greymar Assocs, 882 So. 2d 1004 (Fla. 2004).

 

Accordingly, the Appellate Court reversed trial court’s ruling that the first case was not an adjudication on the merits, and remanded the case for entry of an order of dismissal.

 

 

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@mwbllp.com

 

Admitted to practice law in Illinois

 

 

 

 

 

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