FYI: Fla App Ct (4th DCA) Reverses Dismissal of Re-Filed Foreclosure Action Citing Bartram

The District Court of Appeal of the State of Florida, Fourth District, recently reversed the dismissal of a mortgage foreclosure action based on res judicata and the statute of limitations, holding that the Florida Supreme Court's recent ruling in Bartram v. U.S. Bank National Association and its progeny controlled.

 

In so ruling, the Court confirmed that a second foreclosure action is not barred by the statute of limitations or res judicata where continuing payment defaults occurred within the five years preceding the filing of the second foreclosure action.

 

A copy of the opinion is available at:  Link to Opinion

 

A mortgagee filed a foreclosure action in September of 2015. The complaint alleged that the borrower had defaulted by failing to make the payment due on November 1, 2009 and all payments coming due thereafter.

 

The trial court appointed an attorney ad litem to represent the unknown heirs of the deceased borrower, who filed an answer raising the statute of limitations as a defense on the basis that more than 5 years had passed since the default and a previous foreclosure case, filed in 2011, was dismissed without prejudice in May of 2013.

 

An amended complaint was filed, to which no response was filed, and the case proceeded to trial, at which nobody appeared for the defendants.

 

The trial court took the matter under advisement and three days later entered an order of dismissal, reasoning that the dismissal of the first foreclosure action barred a second action based on the same default of November 1, 2009.

 

The mortgagee moved for rehearing, which was denied.  The mortgagee then appealed.

 

Relying on the Florida Supreme Court's 2016 holding in Bartram v. U.S. Bank National Association, the Appellate Court explained that that decision "clarified a few points of law regarding the effect of prior dismissals of foreclosure proceedings with regards to res judicata and the statute of limitations defense..

 

The Appellate Court recognized that, under Bartram, "each default in monthly payments creates a continuing cause of action."  The Appellate Court noted that the Supreme Court's ruling was supported by "the standard language in residential mortgages granting reinstatement of the mortgage after default, and its agreement with the position of the Real Property Law Section of the Florida Bar that '[t]he lender's right to accelerate is subject to the borrower's continuing right to cure."'

 

The Appellate Court also recognized that the Florida Supreme Court in Bartram concluded that "'the dismissal of the foreclosure action [has] the effect of revoking the acceleration.'"

 

The Appellate Court then concluded, based on one of its own post-Bartram ruling and two post-Bartram rulings of its sister First and Second District Courts of Appeal with similar facts, that regardless of whether the default dates were the same in both actions, because each default creates a new cause of action, the trial court erred by dismissing the case when defaults occurred within 5 years of the filing of the second foreclosure action.

 

Accordingly, the trial court's dismissal was reversed, and the matter remanded to the trial court to calculate the amount due under the note based on defaults which accrued within 5 years before the second suit was filed.   

 

 

 

Ralph T. Wutscher
Maurice 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@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 9th Cir Holds TCPA Claim Not Covered Due to "Invasion of Privacy" Exclusion

The U.S. Court of Appeals for the Ninth Circuit recently held that a liability insurance policy that broadly excluded coverage for invasion of privacy claims also excluded coverage for claims for violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. ("TCPA").

 

A copy of the opinion is available at:  Link to Opinion

 

In 2012, a class action complaint was filed against the Los Angeles Lakers for allegedly sending text messages using an automatic telephone dialing system in violation of the TCPA.  The Lakers asked their insurer to defend them against the lawsuit.

 

The insurance policy required the insurer to pay for losses (with some restrictions) suffered by the Lakers "resulting from any Insured Organization Claim … for Wrongful Acts."  The policy defined "Wrongful Acts" as "any error, misstatement, misleading statement, act, omission, neglect, or breach of duty committed, attempted, or allegedly committed or attempted by" the Lakers.

 

The policy also contained an exclusion for claims "based upon, arising from, or in consequence of libel, slander, oral or written publication of defamatory or disparaging material, invasion of privacy, wrongful entry, eviction, false arrest, false imprisonment, malicious prosecution, malicious use or abuse of process, assault, battery or loss of consortium."

 

The insurer determined that the plaintiff had brought an invasion of privacy suit, which was specifically excluded from coverage, and therefore denied coverage and declined to defend the Lakers.

 

After the insurer's denial of coverage, the Lakers filed a complaint asserting claims for breach of contract and tortious breach of the implied covenant of good faith and fair dealing.

 

The trial court granted the insurer's motion to dismiss.  In so ruling, the trial court held that the TCPA claims were "implicit invasion-of-privacy claims" that fell squarely within the policy's "broad exclusionary clause." 

 

On appeal, the Ninth Circuit began its analysis by examining the terms of the policy under California law. 

 

As you may recall, California courts must "'give[] effect to the mutual intention of the parties as it existed' at the time the contract was executed."  Wolf v. Walt Disney Pictures & Television, 76 Cal. Rptr. 3d 585, 601 (Cal. Ct. App. 2008) (quoting Cal. Civ. Code § 1636).  In addition, courts must give a contract's terms their "ordinary and popular" meaning, "unless used by the parties in a technical sense or a special meaning is given to them by usage."  Palmer v. Truck Ins. Exch., 988 P.2d 568, 652 (Cal. 1999).

 

Additionally, California courts interpret coverage clauses in insurance contracts "broadly so as to afford the greatest possible protection to the insured."  Aroa Mktg., Inc. v. Hartford Ins. Of the Midwest, 130 Cal. Rptr. 3d 466, 470 (Cal. Ct. App. 2011).  However, courts should interpret "exclusionary clauses … narrowly against the insurer."  Id.

 

The Laker's insurance policy did not explicitly exclude coverage of TCPA claims.  As a result,  the Ninth Circuit had to determine whether the TCPA claims fell within the exclusion for claims "based upon, arising from, or in consequence of … invasion of privacy." 

 

Under the text of the TCPA, it is unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States:

 

to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to a … cellular telephone service … or any service for which the called party is charged for the call ….

 

47 U.S.C. § 227(b)(1)(A)(iii).

 

In addition, the Ninth Circuit noted that the TCPA twice explicitly states that it is intended to protect privacy rights.  47 U.S.C. § 227(b)(2)(B)(ii)(I) ("will not adversely affect the privacy rights that this section is intended to protect…"); 227(b)(2)(C) ("the Commission may prescribe as necessary in the interest of the privacy rights this section is intended to protect").

 

Based on the lack of any other statements expressing an alternative intent, and focusing on the ruling making sections of the TCPA, the Ninth Circuit concluded that the purpose of the TCPA was to protect privacy rights and privacy rights alone.

 

Next, the Ninth Circuit analyzed the complaint based on its interpretation on the TCPA's goal of protecting privacy. 

 

The complaint asserted causes of action for negligent violation of the TCPA and knowing/willful violation of the TCPA.  In the Ninth Circuit's view, these two causes of action were unquestionably two invasion of privacy claims, and were excluded under the plain language of the insurance policy. 

 

Therefore, the Ninth Circuit held that the trial court properly concluded that the claims asserted in the complaint were excluded from coverage under the policy.

 

Finally, the Lakers argued that the insurer had a duty to defend, even if the policy did not require the insurer to indemnify costs incurred from the lawsuit, because the plaintiff asserted that he suffered multiple harms, not just an invasion of privacy.  The Lakers also argued that the complaint sought "recovery of economic injury" and explicitly swore off "any recovery for personal injury," and therefore the plaintiff did not seek relief for invasion of his privacy, which is generally a form of "personal injury." 

 

Essentially, the Lakers argued that the insurer had a duty to defend because the policy potentially entitled them to indemnity for other claims.

 

The Ninth Circuit rejected this argument and held that "a TCPA claim is an invasion of privacy claim, regardless of the type of relief sought."  As such, these claims were excluded under the terms of the policy.  Moreover, the Laker did not identify what other claims this set of facts could support.

 

Accordingly, the Ninth Circuit affirmed the dismissal of the complaint.

 

The dissent disagreed with the majority opinion, point out that "[w]hen Congress defines a cause of action based on specific and unambiguous statutory elements, what matters is what the statute says – not what motivated enactment of the statute."

 

Under the plain terms of the TCPA, statutory damages may be recovered when a plaintiff can prove: "(1) the defendant called a cellular telephone number; (2) using an [ATDS]; (3) without the recipient's prior express consent."  Mayer v Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012) (citing 47 U.S.C. § 227(b)(1)).

 

The dissent accused the majority of ignoring the elements of the claim, focusing instead on the misconception that Congress only enacted the TCPA to prevent invasion of privacy, yet nothing in the elements of a TCPA claim says anything about "privacy."

 

The dissent further disagreed the majority's interpretation of the TCPA, pointing out that that "[t]he TCPA specifically addresses public safety concerns, provides redress for economic injury, and protectives businesses from ATDS calls."  Thus, in the dissent's view, not all TCPA claims are privacy claims.

 

The dissent concluded that because the plaintiff only sought recovery based on an alleged violation of the TCPA, and expressly disavowed claims based on invasion of privacy, the insurer had a duty to defend the Lakers.

 

 

 

Ralph T. Wutscher
Maurice 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@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia   |   Illinois   |   Indiana   |   Maryland   |   Massachusetts   |   Michigan   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC   |   Wisconsin

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates and webinar presentations are available on the internet, in searchable format, at:

 

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and

 

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