Amount due

Breach: lenders able to collect the full amount due despite an initial default that occurred outside the limitation period

On August 1, 2018, the Florida State Third District Court of Appeals issued an opinion Gonzalez v. National Federal Mortgage Association, ____ So.3d ____, 2018 WL 3636467 (Fla. 3d DCA August 1, 2018), case no.3D17-1246, ruling that a lender in a foreclosure action may collect the “full amount of the obligation” despite the initial default payment being outside the five-year limitation period for excluding a mortgage, as long as the lender has pleaded the initial default and a continuing state of default. Shortly thereafter, the Florida State Fourth District Court of Appeals issued an opinion in Bank of America, NA v. Graybush, ____ So.3d ____, 2018 WL 3912054 (Fla. 4th DCA August 15, 2018), Case n ° 4D17-1256, weighing on the question and considering that “the Bank was entitled to all the amounts alleged and proven due under the note and mortgage, even amounts owed for more than five years from the date of filing of the complaint.

In González, the lender filed its first foreclosure action on October 3, 2007, alleging “the payment due June 1, 2007 and all subsequent payments”. The original foreclosure lawsuit was dismissed by the trial court. The lender subsequently filed a second foreclosure action on June 12, 2013, which again alleged that the borrowers were in default of the payment due on June 1, 2007 “and all subsequent payments” and exercised its right to advance all amounts owed under the Note and Mortgage. The case was decided and the court of first instance rendered a final judgment in favor of the lender of the “full amount of the obligation”. The borrowers have appealed.

The Third District Court of Appeal considered an issue raised by the borrowers. The borrowers alleged that the lender was barred by the five-year statute of limitations from collecting any amounts owed on the note prior to the complaint in the second foreclosure action (i.e., all amounts owed before June 12, 2008), because the second foreclosure action alleges the same default date of June 1, 2007. Relying on the Florida Supreme Court decision in Bartram v. US Bank National Association, 211 So.3d 1009, 1019 (Fla. 2016), the Court concluded that the second foreclosure action was not prohibited by the limitation period as claimed by the lender “[t]there was a default under the note and mortgage held by the plaintiff in that the payment due June 1, 2007 and all subsequent payments were not made. In addition, the Court held that the lender is not precluded from seeking a final judgment which includes amounts owed outside the five-year limitation period because the lender has alleged a state of persistent default and exercised its right to accelerate all sums due under the note and the mortgage. . The Court said that “when considering an expedited obligation, when the trigger default must occur within the five-year limitation period, the debt that is subject to judgment and collection is the accelerated debt, that is, the entire amount of the mortgage loan ”.

Likewise in Graybush, the Fourth District Court of Appeal considered the same issue on the basis of the decision Bartram and ruled that “on the basis of the contractual provisions of the note, the failure to bring an action for missed payments beyond five years did not waive the Bank’s right to all sums due on a date later, when such later date was not five years beyond a monthly default, or five years after the maturity date of the note. Rather, the Bank “had the right to file a subsequent foreclosure action – and to seek the acceleration of all sums due under the note – as long as the foreclosure action was based on a subsequent default and the limitation period had not run on this particular defect. (Quote Bartram, 211 So.3d to 1021).

The two González and Graybush opinions, however, conflict with the recent opinion of the Fifth District Court of Appeal in Velden v. Nationstar Mortgage, LLC, 234 So.3d 850 (Fla. 5th DCA 2018). In that case, the Fifth District Court of Appeal upheld a final judgment of foreclosure as to liability, but referred the case back to the trial court to reduce the amount of damages by ruling out any breach outside the five-year limitation period. In a specially concurring opinion, Lambert JA of the Fifth District Court of Appeal noted that if he “wrote on a clean slate, [he] would not exclude these sums from the judgment and confirm the final foreclosure judgment for the entire balance due on the thirty-year note in question.

The conflict between these divergent views and the respective interpretations of Bartram and its impact on the amount that lenders can recover when faced with persistent defaults that originate outside of the statute of limitations will almost certainly be taken up by the Florida Supreme Court. While it is not clear how this Court will ultimately decide this issue, a judge already seems to agree that all of these amounts should be recoverable. See Bollettieri Resort Villas Condominium Association, Inc. v. Bank of New York Mellon, 228 So.3d 72 (Fla. 2017) (Lawson, J., concordant) (arguing that “a missed payment does not trigger the execution of the limitation period when the acceleration is optional with the holder”).

The González The opinion is not final, as the court granted a motion for an extension of time to file a motion for a post-decision rehearing until September 21, 2018. Graybush the opinion is not final until the deadline for filing a request for a rehearing on August 30, 2018, or a request for a rehearing filed on time has expired by the court.


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