The District Court of Appeal of the State of Florida, Fourth District, recently reversed the dismissal of a foreclosure complaint, holding that the “notice of assignment of debt” requirement in the Florida Consumer Collection Practices Act (FCCPA), at Fla. Stat. § 559.715, was not a condition precedent to filing the foreclosure action.

However, the Court also held that “the notice requirement of section 559.715 applies to the mortgage foreclosure suit.”

A copy of the opinion in Bank of America, N.A. et al v. Siefker et al is available at: Link to Opinion.

A mortgagee sued to foreclose its mortgage. The borrower raised an affirmative defense that the mortgagee failed to comply with section 559.715 of the FCCPA, which purportedly required the mortgagee to give the borrower written notice of assignment of the mortgage within 30 days before filing “any action to collect the debt.”

At the conclusion of trial, the borrower moved for an involuntary dismissal, arguing there was no evidence of compliance with section 559.715, which the borrower argued was a condition precedent to foreclosure.

The mortgagee argued in response that the FCCPA did not apply to mortgage foreclosure actions and the trial court agreed, denying the borrower’s motion and entering a final judgment of foreclosure.

The borrower moved for rehearing and the trial court changed its mind, granted the motion, vacated the judgment and dismissed the complaint. The mortgagee appealed the dismissal order.

On appeal, the Fourth District first addressed whether section 559.715 applies to mortgage foreclosure actions or, more specifically, “whether a mortgage foreclosure suit is an ‘action to collect the debt’ [under section 559.55(1), which defines “debt”] and, as a separate and distinct issue, whether the notice requirement provided for in the statute acts as a condition precedent to bringing suit.”

Looking to rulings interpreting the federal Fair Debt Collection Practices Act (FDCPA), to which the FCCPA directs courts to give “great weight,” the Court reasoned that the majority view is that a mortgage foreclosure is the enforcement of a security interest and does not constitute debt collection.

The Fourth District further explained that the federal U.S. Court of Appeals for the Sixth Circuit in Glazer v. Chase Home Fin. LLC, 704 F.3d 453 (6th Cir. 2013), “found this approach unpersuasive and it looked to the text of the FDCPA for guidance.”

As you may recall from our prior updates, the Sixth Circuit in Glazer reasoned that because the FDCPA defined “debt” as a consumer’s obligation to pay money “arising out of a transaction …primarily for personal family, or household purposes” … [t]he focus on the underlying transaction indicates that whether an obligation is a ‘debt’ depends not on whether the obligation is secured, but rather upon the purpose for which it was incurred.” In addition, the Sixth Circuit noted, nothing in the statute indicates an intent to exclude foreclosure actions from constituting debt collection activity and every foreclosure action is in fact an attempt to obtain payment of a debt.

In addition, the Fourth District here noted that “[t]he Third and Fourth Circuits have also issued opinions supporting the proposition that a mortgage foreclosure suit is an attempt to collect a debt.” See Kaymark v. Bank of Am., N.A., 783 F.3d 168, 179 (3d Cir. 2015); Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373, 376-77 (4th Cir. 2006).

The Court also looked to rulings by the federal U.S. Court of Appeals for the Eleventh Circuit, which “initially held that ‘foreclosing on a security interest is not debt collection activity for purposes of [the FDCPA], … [but] later recognized that ‘an entity that regularly attempts to collect debts can be a ‘debt collector’ … even when that entity is also enforcing a security interest.”

The Fourth District here reasoned that the Eleventh Circuit’s precedent “indicate[s] that a mortgage foreclosure suit may or may not amount to an attempt to collect a debt, and whether it does depends on the surrounding circumstances.” The Court then concluded that “[h]ere, those circumstances point to debt collection. … Given that the bank brought suit in order to obtain what it was owed, through the sale of the property and, if necessary, a deficiency judgment, the suit is an action to collect a debt and thus falls within the requirements of section 559.715.”

Having found that section 559.715 applies to mortgage foreclosure actions, the Fourth District turned to whether the notice requirement in the statute acts as a condition precedent to bringing a foreclosure action.

The Court looked to the language of the statute, noting that “[t]he plain language does not impose a bar on filing suit if notice is not provided,” distinguishing the case at bar from cases cited by the borrower, “which all involve unambiguous statutory language providing a bar to suit if a specified act was not satisfied.”

Moreover, even if the statute were ambiguous, the Fourth District noted, “the rules of statutory construction would lead to the same result. ‘[W]here reasonable differences arise as to the meaning or application of a statute, rules of statutory construction control.’” One of those rules allows the court to “examine the legislative history of the statute.”

The Court found that “[t]he legislative history of section 559.715 does not reflect any intent by the Legislature that the notice provision of section 559.175 should operate as a condition precedent to filing a mortgage foreclosure suit.” Also, “the Legislature has created a statutory scheme governing mortgage foreclosure suits [in Chapter 702, Florida Statutes, and] [t]he statutes comprising chapter 702 do not provide, as a condition precedent to filing suit, that creditors’ assignees must give debtors notice of the assignment.” Finally, the FCCPA provides for administrative and civil remedies for violation of section 559.72 … [but a] bar to filing suit is not provided for as a sanction.”

In sum, the Court held that “the notice requirement of section 559.715 applies to the mortgage foreclosure suit.” However, the Court also held that “the notice requirement of the statute does not operate as a condition precedent to bringing a mortgage foreclosure suit.”

Accordingly, the trial court’s order was reversed and remanded with instructions to reinstate the final judgment of foreclosure.