The District Court of Appeal of the State of Florida, Fifth District, recently held that where a mortgagee's initial foreclosure action is dismissed after the acceleration clause is triggered, the statute of limitations does not prevent a subsequent foreclosure action based on subsequent defaults.
A copy of the opinion is available at: http://www.5dca.org/Opinions/Opin2014/042114/5D12-3823%20op.pdf
A bank attempted to foreclose on a borrower, but the matter was dismissed after the bank did not appear for a case management conference more than 4 years after the action was filed.
The borrower's ex-wife, who also had a note on the property pursuant to the terms of their divorce, also filed a foreclosure action against the borrower. In that action, the borrower filed a cross-claim against the bank, alleging that the bank was barred from enforcing its rights under the note and mortgage under the statute of limitations, because more than 5 years had passed since his original default.
The bank argued that it was entitled to foreclose based on the payments the borrower missed within the past five years.
The lower court sided with the borrower, finding that the bank had no ability to enforce its rights under the note and mortgage, and quieted title in the borrower's favor. The bank appealed.
The Florida Supreme Court held that "when a second and separate action for foreclosure is sought for a default that involves a separate period of default from the one alleged in the first action, the case is not necessarily barred by res judicata." Singleton v. Greymar Associates, 882 So. 2d 1004, 1006 (Fla. 2004) ("Singleton"). In that case, the Court reasoned that although a foreclosure action based on a certain default might bar a later action based on that same default, it would not bar a later action based on a subsequent default. Id. at 1007.
Although the Florida Supreme Court’s ruling Singleton did not involve a statute of limitations issue, the appellate court here relied on the reasoning contained therein to hold that "a default occurring after a failed foreclosure creates a new cause of action for statute of limitations purposes, even where acceleration had been triggered and the first case was dismissed on its merits."
Accordingly, the appellate court reversed the holding of the lower court, and remanded the matter for further proceedings.
The appellate court also certified the question presented in this matter to the Florida Supreme Court.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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