The District Court of Appeal of the State of Florida, Fourth District, recently reversed summary judgment of foreclosure in favor of a mortgagee, holding that the plaintiff mortgagee failed to satisfy its heightened burden of proving the absence of any genuine issue of material fact on the issue of standing applicable because the motion for summary judgment was filed before the defendant answered the complaint, and the plaintiff mortgagee was on notice at the time that the defendant was contesting standing.

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

A homeowners association (HOA) foreclosed its claim of lien against a homeowner, and a third party company acquired title after it was the highest bidder at the foreclosure sale.

Before the certificate of title was issued in the HOA's foreclosure action, a mortgagee filed a mortgage foreclosure action against the subject property. The mortgagee’s foreclosure complaint alleged that the plaintiff was the servicer for a trustee bank “to whom the note is specifically endorsed.”

The note, a copy of which was attached to the complaint, contained two undated special endorsements, one from the original lender to a non-party and the other from that non-party to the trustee bank for whom the plaintiff was the servicing agent.

The company that acquired title of the subject property in the HOA’s lien foreclosure action moved to intervene as the owner of the property in the mortgage foreclosure action, and also moved to dismiss the complaint. The foreclosure buyer’s motion to dismiss argued among other things that the plaintiff servicer lacked standing to sue. The trial court granted the motion to intervene, but never ruled on the motion to dismiss.

A second servicer was later substituted for the first servicer as plaintiff in the mortgage foreclosure action.  The new servicer moved for summary judgment, attaching to the motion several affidavits, one of which contained the statement that the plaintiff “holds the promissory note.” In response, the foreclosure buyer filed an affidavit contesting standing.

At the hearing on the plaintiff servicer's motion for summary judgment, the plaintiff servicer filed the original note and mortgage. The foreclosure buyer argued that plaintiff servicer had not met its heightened burden of proof applicable when a motion for summary judgment is filed before the non-movant filed its answer to the complaint, and also failed to show that there did not exist a genuine issue of a material fact.

In response, plaintiff servicer argued that it had standing because it was substituted as the plaintiff for the first servicer; the note was endorsed to the loan owner for whom the plaintiff servicer had a power of attorney.

However, the second servicer did not introduce any affidavit or other evidence reflecting its status as attorney in fact or servicer for the loan owner. The trial court nevertheless granted the plaintiff servicer's motion for summary judgment and entered a final judgment in plaintiff servicer's favor. The foreclosure buyer moved for rehearing, which was denied, and it appealed.

The Appellate Court began its analysis by explaining that under Florida Rule of Civil Procedure 1.510(c), “[s]ummary judgment is appropriate only where 'there is no genuine issue of material fact and if the moving party is entitled to a judgment as a matter of law.' … The burden is on the moving party to 'show conclusively the absence of any genuine issue of material fact and the court must draw every possible inference in favor of the party against whom a summary judgment is sought. … Notably, 'a plaintiff who moves for summary judgment before a defendant files an answer has a 'difficult burden.'”

In this situation, “the plaintiff must not only establish that no genuine issue of material fact is present in the record as it stands, but also that the defendant could not raise any genuine issues of material fact if the defendant were permitted to answer the complaint.”

The Appellate Court agreed with the foreclosure buyer that the plaintiff servicer failed to show that no answer that it might file would present a genuine issue of material fact on the issue of standing, relying on its 2012 decision in Dominko v. Wells Fargo Bank, N.A., which held that “it was error to enter summary judgment in favor of the bank where it had 'failed to meet its burden [to] show that no answer which the [homeowner] might file could present a genuine issue of fact.'”

The Appellate Court reasoned that in the case at bar, as in Dominko, when the plaintiff servicer moved for summary judgment, the foreclosure buyer had not yet answered the complaint.

In addition, the homeowner in Dominko had moved for summary judgment, challenging the mortgagee's compliance with the pre-suit notice requirement, whereas the foreclosure buyer in the case at bar had filed a motion to dismiss and an affidavit opposing the motion for summary judgment challenging standing.

Finally, the Appellate Court noted that, like in Dominko, the record reflected that the plaintiff servicer failed to meet its burden of proof by filing “sufficient summary judgment evidence regarding its standing to file suit.”

Thus, the final summary judgment in the plaintiff servicer's favor was reversed and the case remanded for further proceedings.