Tuesday, February 17, 2015

FYI: Fla App Ct (5th DCA) Holds Mortgagee Failed to Provide Sworn Copy of Acceleration Notice, Reverses Foreclosure Judgment

The District Court of Appeals of the State of Florida, Fifth District, recently held that a trial court erred in granting a mortgagee’s motion for summary judgment where the mortgagee failed to provide an authenticated notice of acceleration in support of its motion for summary judgment. 


The Appellate Court also held that the borrower sufficiently plead a condition precedent defense by pleading that the mortgagee failed to comply with the terms of two paragraphs of the mortgage. 


In addition, the Appellate Court held that the borrower, as a party opposing a motion for summary judgment, had no initial obligation to submit affidavits or proof to establish his affirmative defenses, and that the mortgagee had to evidence the nonexistence of a question of material fact before the borrower was required to submit evidence in support of its affirmative defense.


A copy of the opinion is available at:  http://www.5dca.org/Opinions/Opin2015/020215/5D14-1191.op.pdf


In January 2013, the mortgagee (Lender) filed a verified amended complaint seeking for foreclose a mortgage executed by the borrower (Borrower).  Borrower filed an answer generally denying Lender’s allegations that Lender had fulfilled all conditions precedent prior to filing the foreclosure action.   Borrower also filed an affirmative defense stating that Lender failed to comply with a condition precedent contained in Paragraph 22 of the Mortgage.


Paragraph 22 of the mortgage provided:



Acceleration; remedies.  Lender shall give notice to borrower prior to acceleration following borrower s breach of any covenant or agreement in this security instrument (but not prior to acceleration under section 18 unless applicable law provides otherwise).  The notice shall specify: (a) the default; (b) the action required to cure the default; (c) the date not less than 30 days from the date the notice is given to borrower, by which the default must be cured; (d) the failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this security instrument, foreclosure by judgment proceeding and sale of the property.  The notice shall further inform borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of borrower to acceleration and foreclosure.  If the default is note cured before the date specified in the notice, lender at its option may require immediate payment in full of all sums secured by this security instrument by judicial proceeding.  Lender shall be entitled to collect all expenses incurred in pursing the remedies provided in this section 22, including, but not limited to, reasonable attorney’s fees and costs of title evidence.



In July 2013, Lender filed a motion for summary judgment together with an affidavit of indebtedness establishing that Borrower defaulted on his mortgage obligations and the amounts then due and owing under the note and mortgage. 


However, in its motion and affidavit, Lender did not respond to Borrower’s affirmative defense of the lack of the condition precedent, and Lender did not attach to its affidavit a copy of an acceleration letter.


Lender argued: (1) the verified amended complaint signed under oath by its designated representative specifically alleged that it complied with all conditions precedent; (2) the affirmative defense was insufficiently pleaded; and (3) Borrower had not filed an affidavit in opposition to the motion for summary judgment.  Borrower contended that as there was no summary judgment evidence “authenticating the breach letter,” he was not obligated to file an affidavit in opposition.


The trial court entered summary judgment in favor of Lender, and Borrower appealed.


On appeal, the Appellate Court rejected Lender’s argument that Borrower’s affirmative defense was insufficiently pleaded. 


The Appellate Court noted that Borrower specifically plead that Lender failed to comply with the notice requirements contained in paragraphs 15 and 22 of the mortgage, and noted that the Second District Court of Appeals had previously deemed such a pleading sufficient.   See DiSalvo v. SunTrust Mortg., Inc., 115 So. 3d 438, 439-41 (Fla 2d DCA 2013).


The Appellate Court also noted that there was some dispute as to whether Lender provided Borrower with a copy of the acceleration letter during discovery or at the summary judgment hearing.  However, it was undisputed that Lender never filed an authenticated copy of the letter pursuant to Florida Rule of Civil Procedure 1.510(c), which requires a movant to serve at least 20 days before the time fixed for the hearing of all summary judgment evidence on which the movant relies.  See Green v. JPMorgan Chase Bank, N.A., 109 So. 3 1285, 1288 n.2 (Fla. 5th DCA 2013) (noting that unauthenticated documents cannot be used in support of a motion for summary judgment).


Lender also argued on appeal that summary judgment should still be affirmed because Borrower did not raise a genuine issue of material fact.  However, the Appellate Court noted that a party opposing a motion for summary judgment has no initial obligation to submit affidavits or proof to establish its affirmative defenses.  See Stop & Shoppe Mart, Inc. v. Mehdi, 854 So. 2d 784, 786 (Fla. 5th DCA 2003).  Only when the party moving for summary judgment has properly met its burden of proof demonstrating the nonexistence of a genuine issue of material fact that the opposing party is then obligated to prove the existence of an issue of material fact.  See Lindsey v. Cadence Bank, N.A. 135 So. 3d 1164, 1167 (Fla. 1st DCA 2014).


Finally, the Appellate Court rejected Lender’s argument that the verified complaint proved Lender complied with paragraph 22 of the mortgage.  The Appellate Court noted that the verified complaint failed to comply with Florida Rule of Civil Procedure 1.510(e). 


According to the Appellate Court, in order to factually refute Borrower’s affirmative defense, Lender needed to have a competent witness execute a legally sufficient affidavit authenticating the letter, attach the letter to the affidavit and timely file the letter.  See Lindgren v. Deutsche Bank National Trust Co., 115 So. 3d 1076 (Fla. 4th DCA 2013).


Accordingly, the Appellate Court reversed the entry of summary judgment in favor of Lender and remanded the case to the trial court for further proceedings.





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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