THE BANK OF NEW YORK MELLON, etc. v. TIMOTHY M. KARDOK a/k/a TIMOTHY KARDOK

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

THE BANK OF NEW YORK MELLON,

Appellant,

v.

TIMOTHY M. KARDOK a/k/a TIMOTHY KARDOK,

Appellee.

No. 4D22-730

[June 21, 2023]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit,

Broward County; Barry J. Stone, Senior Judge; L.T. Case No. CACE 19-

004885(11).

Morgan L. Weinstein of Van Ness Law Firm, PLC, Fort Lauderdale, for

appellant.

Jonathan Kline of Jonathan Kline, P.A., Weston, for appellee.

CONNER, J.

In this appeal, the specific question we address is whether

circumstantial evidence was competent substantial evidence to negate by

a preponderance of evidence the direct evidence that the Bank of New York

Mellon (“the bank”) had standing to bring the mortgage foreclosure suit

below. We hold that, under the facts of this case, such circumstantial

evidence was not competent substantial evidence to defeat the bank’s

standing. We therefore reverse the trial court’s final judgment in favor of

Timothy M. Kardok a/k/a Timothy Kardok (“the homeowner”).

Background

In 2004, the homeowner executed and delivered a note and mortgage

to America’s Wholesale Lender (“the original lender”). Mortgage Electronic

Registration Systems, Inc. (“MERS”) was identified in the mortgage as the

nominee for the original lender.

In 2019, the bank sued to foreclose on the mortgage and reestablish a

lost note, alleging that it “[wa]s not in possession of the note, but [wa]s

entitled to enforce it.” Attached to the complaint was a lost note affidavit

executed by the then-current servicer for the mortgage and attorney-in-

fact for the bank. In addition to alleging the execution and delivery of the

note to the original lender, the affidavit alleged the note and mortgage had

been assigned to the bank by the original lender. Further, the affidavit

alleged the bank had searched for the original note but was unable to find

it and had no knowledge as to when or how it was lost. Attached to the

affidavit was a “true and correct” copy of the lost note. According to the

copy, the note was unendorsed. Also attached to the affidavit was a copy

of the assignment executed by MERS and recorded in 2012. The

assignment assigned all interests under the mortgage “together with the

note[]” to the bank.

The complaint’s attachments also included a loan modification

agreement executed and recorded in 2006. The modification agreement

was between the homeowner and Countrywide Home Loans, Inc.

(“Countrywide”), and stated it “amend[ed] and supplement[ed]” the

mortgage and the note. The modification agreement further identified

Countrywide as “Lender” and did not mention any other entities. It set

forth a revised payment schedule for the homeowner but stated that the

note and mortgage would otherwise remain unchanged.

The homeowner raised the affirmative defense of standing, and the case

proceeded to a nonjury trial. The bank presented a case manager for the

servicer as its sole witness. The bank also introduced into evidence

multiple documents, the most pertinent to this appeal being copies of the

note and mortgage, the assignment to the bank, a custodian log regarding

the note, and the mortgage modification agreement.

The case manager testified as to the boarding and verification process

that took place following the 2012 assignment of the note and mortgage to

the bank, including the verification of original loan documents. He also

testified the servicer conducted a due diligence check, looking for the

original note and checking with prior loan servicers who may have had it.

Based on the custodian log, the case manager testified that during the

boarding process, the servicer looked for but was unable to locate the

“collateral file” for the loan. The case manager testified that the servicer

determined through the independent verification process that the note had

been lost before it was assigned to the bank by the original lender. Nothing

in the independent verification process indicated the original lender had

transferred the note to anyone other than the bank. The case manager

also testified that the bank agreed to indemnify the homeowner if another

party later found and enforced the original note.

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The homeowner did not cross-examine the case manager, move for

involuntary dismissal after the bank rested, or present any witnesses or

evidence in defense.

During closing arguments, the homeowner argued, for the first time,

that the bank had not presented any evidence as to the note’s holder at

the time the note was lost. Citing Sabido v. Bank of New York Mellon, 241

So. 3d 865 (Fla. 4th DCA 2017), the homeowner argued the assignment

was meaningless because the assignment did not “state on whose behalf”

MERS was transferring the note. Additionally, the homeowner argued the

complaint likewise did not allege when the note was lost, and the bank

never entered the lost note affidavit into evidence.

The homeowner argued the bank’s evidence was particularly

concerning because of the loan modification agreement, which was entered

into by Countrywide and not the original lender. The homeowner therefore

argued the bank had not shown an unbroken chain of transfers.

The bank countered that the 2012 assignment was valid as it

transferred the note and mortgage from MERS, as nominee for the original

lender, to the bank. Because the note was unendorsed, even if

Countrywide physically possessed it, Countrywide could not enforce it.

The bank argued that the homeowner’s arguments were irrelevant because

Countrywide was just another servicer, not another lender or note holder.

The bank contended only two potential note owners or holders were

involved: the original lender and the bank. Thus, the bank argued it had

shown standing in two different ways: through the assignment and

through reestablishment of the lost note. The bank additionally argued

that Sabido made it clear that reestablishment of a lost note did not require

the lost note affidavit to be admitted into evidence. Instead, the required

information could be supplied by testimony.

After closing arguments, the trial court verbally ruled that the mortgage

modification agreement created “too big a gap here for me to say that I can

find by a preponderance of the evidence before me that the note was a

result of the transfer in accordance with the language of the statute

673.3091.” The trial court subsequently entered a final judgment in the

homeowner’s favor, stating that the bank “failed to prove standing by

failing to prove compliance with Florida Statute § 673.3091[(1)](a).” The

bank gave notice of this appeal.

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Appellate Analysis

The bank argues it proved its standing because it reestablished the lost

note and, regardless of the lost note, the assignment from MERS

established standing. The homeowner counters that the trial court

correctly found the bank did not reestablish the lost note because the loan

modification listing Countrywide as the lender broke the chain of

assignments, and the assignment to the bank from MERS was invalid

because it did not list an assignor.

A party’s standing is a legal issue, reviewed de novo. Lewis v. US Bank

Nat’l Ass’n, 298 So. 3d 72, 75 (Fla. 4th DCA 2020). “A trial court’s

determination of whether a party has reestablished a lost note is reviewed

for sufficiency of the evidence” and “[a]n appellate court may reverse on

finding a failure of proof.” Id. (quoting Home Outlet, LLC v. U.S. Bank Nat’l

Ass’n, 194 So. 3d 1075, 1077 (Fla. 5th DCA 2016)).

“A plaintiff seeking to foreclose a mortgage must tender the original

promissory note to the trial court or seek to reestablish the lost note

pursuant to section 673.3091, Florida Statutes.” Am. Residential Equities

LLC v. Saint Catherine Holdings Corp., 306 So. 3d 1057, 1059 (Fla. 3d DCA

2020) (quoting Boumarate v. HSBC Bank USA, N.A., 172 So. 3d 535, 536

(Fla. 5th DCA 2015)); see also Sabido, 241 So. 3d at 866 (noting same).

Section 673.3091, Florida Statutes (2019), governing reestablishment

of lost notes, provides:

A person not in possession of an instrument is entitled to

enforce the instrument if:

(a) The person seeking to enforce the instrument was entitled

to enforce the instrument when loss of possession occurred,

or has directly or indirectly acquired ownership of the

instrument from a person who was entitled to enforce the

instrument when loss of possession occurred;

(b) The loss of possession was not the result of a transfer by

the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the

instrument because the instrument was destroyed, its

whereabouts cannot be determined, or it is in the wrongful

possession of an unknown person or a person that cannot be

found or is not amenable to service of process.

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§ 673.3091(1), Fla. Stat. (2019) (emphasis added).

“A party seeking to reestablish a lost note may meet the statutory

requirements ‘either through a lost note affidavit or by testimony from a

person with knowledge.’” Lewis, 298 So. 3d at 76 (quoting Sabido, 241

So. 3d at 866). “The lost note affidavit or testimony need not ‘establish

exactly when, how, and by whom the note was lost.’” Id. (quoting Sabido,

241 So. 3d at 867). “It must, however, prove the party seeking

reestablishment of the note acquired ownership from a party with the right

to enforce the note when lost.” Id. “At a minimum then, the evidence must

establish who had the right to enforce the note when it was lost and how

the party seeking reestablishment obtained ownership.” Id. (emphasis

added).

Except for the circumstantial evidence discussed later in this opinion,

if the assignment in this case was valid, then the bank qualified as an

entity that “directly or indirectly acquired ownership of the instrument

from a person who was entitled to enforce the instrument when loss of

possession occurred.” § 673.3091(1)(a), Fla. Stat. (2019). This appeal

therefore turns in part on the assignment’s validity.

The homeowner argues that the assignment was invalid for several

reasons, 1 including that the assignment lacked an assignor and was

therefore “meaningless” under sections 701.01 and 701.02(5), Florida

Statutes (2016). However, this argument ignores that MERS is clearly the

assignor, explicitly assigned both the note and the mortgage, and is

designated as the original lender’s nominee in the mortgage itself. Thus,

the homeowner’s cite to Forty One Yellow, LLC v. Escalona, 305 So. 3d 782

(Fla. 2d DCA 2020), is distinguishable because that case involved the

transfer of interests not actually held by the assignor. Id. at 787.

Insofar as the homeowner’s argument can be read as taking issue with

the fact that MERS was identified in the assignment as the mortgage

holder (rather than the mortgage and note holder), the homeowner’s

argument still lacks merit. The mortgage, again, makes clear that MERS

had authority to assign the note. The assignment, furthermore, stated

that it transferred the note and the mortgage. Cf. Forty One Yellow, 305

So. 3d at 787 (finding no standing based on assignment from MERS failing

to mention the note). The homeowner has not identified, and we have not

found, any cases in which such a transfer was held ineffective.

1Without further discussion, we determine the homeowner’s other arguments

challenging the assignment’s validity are without merit.

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We therefore conclude the homeowner’s arguments that the

assignment was “meaningless” have no merit. In fact, as discussed further

below, the assignment was direct evidence that the note’s ownership

passed from the original lender to the bank. Thus, the next issue we must

address is whether this direct evidence was undermined by circumstantial

evidence concerning Countrywide.

Normally, the defendant has the burden of proof as to an affirmative

defense. See, e.g., Custer Med. Ctr. v. United Auto. Ins. Co., 62 So. 3d 1086,

1096 (Fla. 2010). However, as discussed by the Second District in Winchel

v. PennyMac Corp., 222 So. 3d 639 (Fla. 2d DCA 2017), “[a]s defenses go,

standing has become something of a legal oddity. We treat it as an

affirmative defense in that the defendant must put it in play by raising it

in an appropriate pleading—ordinarily, the answer.” Id. at 642; see also

Morroni v. Wilmington Sav. Fund Soc’y FSB, 292 So. 3d 514, 516 n.1 (Fla.

2d DCA 2020) (“The defendant . . . bears the burden of raising standing as

an issue to be tried in the case, typically by pleading it as an affirmative

defense in the answer.”). Yet, in the context of mortgage foreclosures,

“once injected into a case . . . we say that [standing] must be proved at

trial by the plaintiff. Once put at issue by a defendant, then, standing

becomes a part of the prima facie case that a foreclosure plaintiff must

prove in order to secure a judgment.” Winchel, 222 So. 3d at 643 (citations

omitted); see also McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d

170, 173 (Fla. 4th DCA 2012) (“A crucial element in any mortgage

foreclosure proceeding is that the party seeking foreclosure must

demonstrate that it has standing to foreclose.”).

The evidence in this case clearly established that the note was lost while

the original lender was the owner. The copy of the note showed it was

unendorsed. The bank’s witness also testified, based on the diligent

search for the note as part of the boarding process when the note and

mortgage were assigned to the bank, that the bank did not locate any

evidence of the note having been transferred to an entity other than the

bank. Thus, the bank presented evidence demonstrating that the bank’s

lack of possession of the note was not because the note had been

transferred to another person or entity by the original lender. Further,

this evidence, plus the assignment of the note and mortgage from the

original lender to the bank, amounted to a prima facie case that the bank

had standing to bring the foreclosure suit. See § 673.3091(1), Fla. Stat.

(2019). It was then incumbent on the homeowner to undermine this prima

facie case. See Elizon DB Transfer Agent, LLC v. Ivy Chase Apartments,

Ltd., 297 So. 3d 641, 645 (Fla. 2d DCA 2020) (reversing foreclosure

dismissal where allonge established standing and there was no evidence

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disputing the allonge was executed prior to foreclosure suit); Kronen v.

Deutsche Bank Nat’l Tr. Co. as Tr. for WAMU Pass-Through Certificates,

Series 2006-AR3, 267 So. 3d 447, 448 (Fla. 4th DCA 2019) (affirming

foreclosure where homeowner offered no evidence to rebut the Ortiz

presumption proving standing 2).

At the close of the bank’s presentation of evidence, however, the

homeowner chose to take a risk: he did not to move for involuntary

dismissal or present any evidence in defense. In closing arguments, the

homeowner stressed more than once that the note in this case was

unendorsed. Although neither party explicitly argued whether the

modification agreement identifying Countrywide as “Lender” was

circumstantial evidence that the note had been transferred by the original

lender to Countrywide, that was the substance of the homeowner’s closing

argument. The homeowner did not point to any other evidence in support

of his contention that the note had been transferred to Countrywide, and

did not address testimony from the bank’s witness that all of the bank’s

documents pertaining to the collateral (i.e., the copies of the note and

mortgage) came from prior servicers. This would include the modification

agreement (which also had been attached to the complaint).

Ultimately, the trial court found that the 2012 MERS assignment was

clear evidence of standing but found in the homeowner’s favor based on

the possibility that the 2006 modification agreement between Countrywide

and the homeowner, standing alone, created a “gap” in the evidence. The

trial court’s conclusion primarily turned on one thing: the identification of

Countrywide as “Lender” in the modification agreement.

There was no evidence the note was endorsed (and in fact the

homeowner stressed it was not). There was no evidence the note had been

assigned to Countrywide. The homeowner did not cross-examine the

bank’s witness or present any evidence in defense, but wholly traveled on

the identification of Countrywide as “Lender” in the modification

agreement to argue that it was possible the note had been transferred to

Countrywide. Moreover, the modification agreement did not contain any

language (other than identifying Countrywide as “Lender”) indicating that

Countrywide was the owner or holder of the note. Instead, the

modification agreement contained language that “[e]xcept as otherwise

specifically provided in this Agreement, the Note and Security Instrument

will remain unchanged,” indicating the original lender remained as the

holder and owner of the note.

2 Ortiz v. PNC Bank, Nat’l Ass’n, 188 So. 3d 923, 925 (Fla. 4th DCA 2016).

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Additionally, the documents connected with the loan show some very

close connection between Countrywide and the original lender, which

circumstantially suggests that the two were in fact one. The mortgage,

interest only rate adjustment rider, and planned unit development rider,

all of which were signed by the homeowner at the loan closing, contain a

notation at the top that each was prepared by an employee of the original

lender and the document was to be returned after recording to the

document processing department of Countrywide. The mortgage to the

original lender states it was prepared by “Dwayne Crawford – America’s

Wholesale Lender.” But the interest only adjustable-rate rider states that

it was prepared by “Dwayne Crawford – Countrywide Home Loans, Inc.”

The rider also states that it is an amendment to the note given by the

homeowner to “Countrywide Home Loans, Inc. (the Lender).” Thus, the

loan documents signed at closing provided circumstantial evidence that

the original lender and Countrywide were closely connected and may have

been the same entity.

The problem with the homeowner’s circumstantial evidence argument

is that “circumstantial evidence in a civil action will not support a jury

inference if the evidence is purely speculative and, therefore, inadequate

to produce an inference that outweighs all contrary or opposing

inferences.” Food Fair Stores, Inc. v. Trusell, 131 So. 2d 730, 733 (Fla.

1961); see also R.J. Reynolds Tobacco Co. v. Nelson, 353 So. 3d 87, 93 (Fla.

1st DCA 2022) (“[C]ircumstantial evidence cannot merely raise an

unfounded suspicion or legally sufficient speculation that allows an

intentional-tort claim to be submitted to a jury.” (quoting R.J. Reynolds

Tobacco Co. v. Whitmire, 260 So. 3d 536, 540 (Fla. 1st DCA 2018)))); Winn

Dixie Stores, Inc. v. White, 675 So. 2d 702, 703 (Fla. 4th DCA 1996) (citing

Trusell, 131 So. 2d at 733). Stated differently, “[i]t is a well-settled

principle that a fact cannot be established by circumstantial evidence

which is perfectly consistent with direct, uncontradicted, reasonable and

unimpeached testimony that the fact does not exist.” Mount Sinai Med.

Ctr. of Greater Miami, Inc. v. Gonzalez, 98 So. 3d 1198, 1201 n.3 (Fla. 3d

DCA 2012) (quoting Alan & Alan, Inc. v. Gulfstream Car Wash, Inc., 385

So. 2d 121, 123 (Fla. 3d DCA 1980)).

Here, the bank not only made a prima facie case of standing based on

direct evidence, but the only evidence which the homeowner cited to the

contrary was circumstantial evidence that could just as well have been

consistent with the bank’s case. The mortgage designates MERS as

nominee for the original lender and its “successors and assigns.” Nothing

in the modification agreement changes that. Indeed, the modification

agreement only altered the homeowner’s payment schedule and left all

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other terms of the mortgage in place. Nothing in the assignment indicates

it was invalid.

Accordingly, we hold that the bank satisfied its burden to prove its

standing. We further hold that, on the facts of this case (i.e., where the

note was unendorsed and there was direct evidence that the original lender

transferred ownership of the note by a recorded written assignment),

circumstantial evidence supporting an inference about the status of a third

entity was not competent substantial evidence to rebut by a

preponderance of evidence that the bank lacked standing to foreclose the

mortgage.

Conclusion

Having determined that no competent substantial evidence rebutted

the bank’s direct evidence that the note and mortgage had been

transferred and assigned by the original lender to the bank, we reverse the

trial court’s final judgment that the bank failed to prove standing, and we

remand the case for further proceedings.

Reversed and remanded for further proceedings.

WARNER and DAMOORGIAN, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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