Susan Lloyd and James Lloyd v. The Bank of New York Mellon

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

SUSAN LLOYD and JAMES LLOYD,

Appellants,

v.

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK,

as Trustee for the Certificate Holders of CWABS, INC., Asset-Backed

Certificates, Series 2006-6,

Appellee.

No. 4D13-3799

[March 25, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm

Beach County; Kenneth D. Stern, Judge; L.T. Case No. 502009CA

032165AW.

Bonnie S. Satterfield, Coral Springs, for appellants.

David W. Rodstein of Padula Hodkin, PLLC, Boca Raton, for appellee.

KLINGENSMITH, J.

Susan and James Lloyd (“Defendants”) executed a mortgage agreement

and a promissory note with ACCU Funding Corporation (“ACCU”) for a

loan, but later defaulted on their mortgage by failing to make any

payments. The Bank of New York Mellon f/k/a The Bank of New York, as

Trustee for the Certificate Holders of CWABS Inc., Asset-Backed

Certificates, Series 2006-6 (“Plaintiff”) filed its complaint against

Defendants containing one count for foreclosure of the mortgage and one

count to enforce a lost instrument. Defendants claim the Plaintiff failed to

prove standing to bring this action. We agree.

A copy of the mortgage agreement between Defendants and ACCU was

attached to the complaint, along with a copy of the promissory note

bearing an undated blank endorsement from ACCU. Before trial, the

Plaintiff filed the original promissory note with the court. The endorsement

in blank on the version of the note filed with the initial complaint was

altered on the second version of the note, to reflect an endorsement from

ACCU to Countrywide Bank, N.A.1

Along with the original note, Plaintiff filed an assignment of mortgage

from ACCU to Plaintiff dated one month after suit was filed, although the

document also stated that the assignment was intended to “relate back”

to the month preceding Plaintiff’s filing of the initial complaint. The trial

court ruled that Plaintiff had standing to file the lawsuit, and entered a

final judgment of foreclosure in favor of Plaintiff. We review the sufficiency

of the evidence to prove standing to bring a foreclosure action de novo.

Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA

2014).

“A crucial element in any mortgage foreclosure proceeding is that the

party seeking foreclosure must demonstrate that it has standing to

foreclose.” See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d

170, 173 (Fla. 4th DCA 2012). Standing must exist at the time the

foreclosure suit is filed. Id.; see also Vidal v. Liquidation Props., Inc., 104

So. 3d 1274, 1276 (Fla. 4th DCA 2013); GMAC Mortg., LLC v. Choengkroy,

98 So. 3d 781, 781 (Fla. 4th DCA 2012). A plaintiff may satisfy this burden

by submitting “the note bearing a special endorsement in favor of the

plaintiff, an assignment from payee to the plaintiff or an affidavit of

ownership proving its status as holder of the note.” Rigby v. Wells Fargo

Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012).

When a plaintiff asserts standing based on an undated endorsement of

the note, it must show that the endorsement occurred before the filing of

the complaint through additional evidence, such as the testimony of a

litigation analyst. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951

(Fla. 4th DCA 2014). In Sosa, this court held the bank failed to establish

standing, because its litigation analyst did not clearly testify as to when

the bank became the owner of the note. Id. at 951-52. Where a later-filed

promissory note does not include the date upon which the endorsement

was made, the plaintiff must provide “record evidence proving that it had

the right to enforce the note on the date the complaint was filed.” McLean,

79 So. 3d at 174.

1Where the endorsement on the promissory note attached to the initial complaint

had nothing written on the “pay to the order of” line, that space on the original

note contained a “Countrywide Bank, N.A.” stamp. None of the endorsements on

either version of the note were dated, and there is no other information in the

record that sheds any light on when these endorsements were made.

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Here, Plaintiff called a witness who testified that while assignments do

not always strictly occur on the dates shown on the document, he was

unable to say whether the note attached to the initial complaint was the

most recent copy of that document, and could only assume that was the

case. He also did not provide any information definitively establishing that

Plaintiff had possession of the note prior to the time it filed its initial

complaint. As a result, Plaintiff was unable to prove it had “standing to

bring a mortgage foreclosure complaint by establishing an assignment or

equitable transfer of the note and mortgage prior to instituting the

complaint.” Joseph v. BAC Home Loans Servicing, LP, No. 4D12-4137,

2015 WL 71842, at *1 (Fla. 4th DCA Jan. 7, 2015) (emphasis added) (citing

McLean, 79 So. 3d at 173).

Plaintiff’s evidence supporting its claim that the assignment of the

mortgage “related back” to before the suit commenced was also insufficient

to prove standing in this case. The witness testified that he did not have

any information, other than the document itself, to verify when the

assignment took place. In situations where mortgage assignments have

been back-dated to pre-date the filing of the initial complaint, this court

has stated that:

[T]wo inferences can be drawn from the effective date

language. One could infer that ownership of the note and

mortgage were equitably transferred [on the earlier date], but

one could also infer that the parties to the transfer were

attempting to backdate an event to their benefit. Because the

language yields two possible inferences, proof is needed as to

the meaning of the language, and a disputed fact exists.

Vidal, 104 So. 3d at 1277 (footnote omitted).

As such, “[a]llowing assignments to be retroactively effective would be

inimical to the requirements of pre-suit ownership for standing in

foreclosure cases.” Id. at 1277 n.1.

Because neither the information included in the record nor the

witness’s testimony resolved the issue of when the assignments to the

Plaintiff occurred, it cannot be said that the assignment of the note and

the mortgage took place “prior to instituting the complaint.” Joseph, 2015

WL 71842, at *1 (citing McLean, 79 So. 3d at 173). Since the trial court’s

conclusion that Plaintiff had standing to foreclose is not supported by

competent substantial evidence, we hereby reverse the final judgment of

foreclosure entered in favor of Plaintiff, and remand this case to the trial

court for entry of a judgment in favor of the Defendants. De Groot v.

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Sheffield, 95 So. 2d 912, 916 (Fla. 1957) (stating that “the evidence relied

upon to sustain the ultimate finding should be sufficiently relevant and

material that a reasonable mind would accept it as adequate to support

the conclusion reached”).

Reversed and Remanded with instructions.

GROSS and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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