On August 1, 2018, the State of Florida's Third District Court of Appeal issued an opinion Gonzalez v. Federal National Mortgage Association, ____ So.3d ____, 2018 WL 3636467 (Fla. 3d DCA August 1, 2018), Case No. 3D17-1246, holding that a lender in a foreclosure lawsuit may collect the “full amount of the obligation” despite the initial payment default being outside of the five year statute of limitations to foreclose a mortgage, as long as the lender has pled the initial default and a continuing state of default. Shortly thereafter, the State of Florida's Fourth District Court of Appeal issued an opinion in Bank of America, N.A. v. Graybush, ____ So.3d ____, 2018 WL 3912054 (Fla. 4th DCA August 15, 2018), Case No. 4D17-1256, weighing in on the issue and holding that “the Bank was entitled to all sums alleged and proven due under the note and mortgage—even those sums due more than five years from the date of filing the complaint.”

In Gonzalez, the lender filed its initial foreclosure lawsuit on October 3, 2007, alleging that “the payment due June 01, 2007 and all subsequent payments.” The initial foreclosure lawsuit was dismissed by the trial court. The lender subsequently filed a second foreclosure lawsuit on June 12, 2013, which again alleged that the borrowers were in payment default from the payment due on June 1, 2007 “and all subsequent payments” and exercised its right to accelerate all amounts due under the Note and Mortgage. The case proceeded to trial and the trial court entered final judgment in favor of the lender of the “full amount of the obligation.” The borrowers appealed.

The Third District Court of Appeal examined one issue raised by the borrowers. The borrowers alleged that the lender was barred by the five-year statute of limitations from collecting any amounts that were due on the Note prior to the complaint in the second foreclosure lawsuit (i.e., any amounts due before June 12, 2008), as the second foreclosure lawsuit alleges the same default date of June 1, 2007. Relying on the holding of the Florida Supreme Court in Bartram v. U.S. Bank National Association, 211 So.3d 1009, 1019 (Fla. 2016), the Court found the second foreclosure lawsuit was not barred by the statute of limitations as the lender alleged “[t]here has been a default under the note and mortgage held by Plaintiff in that the payment due June 1, 2007 and all subsequent payments have not been made.” Further, the Court held that the lender is not barred from seeking a final judgment that includes amounts due outside the five year statute of limitations because the lender alleged a continuing state of default and exercised its right to accelerate all sums due under the Note and Mortgage. The Court stated that “when considering an accelerated obligation, while the triggering default must occur within the five year limitations period, the debt that is subject to judgment and collection is the accelerated debt, i.e., the entire amount under the mortgage loan.”

Similarly in Graybush, the Fourth District Court of Appeal examined the same issue based on the holding in Bartram and held that “based on the contractual provisions of the note, neglecting to sue for missed payments beyond five years did not waive the Bank's entitlement to all sums due on a later date, when that later date did not lie five years beyond a monthly default, or five years beyond the maturity date of the note.” Rather, the Bank “had the right to file a subsequent foreclosure action—and to seek acceleration of all sums due under the note—so long as the foreclosure action was based on a subsequent default, and the statute of limitations had not run on that particular default.” (Quoting Bartram, 211 So.3d at 1021).

Both the Gonzalez and Graybush opinions, however, conflict with the Fifth District Court of Appeal's recent opinion in Velden v. Nationstar Mortgage, LLC, 234 So.3d 850 (Fla. 5th DCA 2018). In that case, the Fifth District Court of Appeal affirmed a final judgment of foreclosure as to liability but remanded the case to the trial court to reduce the amount of damages by excluding any defaults that fell outside of the five year statute of limitations period. In a specially concurring opinion, Judge Lambert of the Fifth District Court of Appeal noted that if he “were writing on a clean slate, [he] would not exclude these sums from the judgment and would affirm the final judgment of foreclosure for the entire balance owed on the thirty-year note at issue.”

The conflict between these differing opinions and the respective interpretations of Bartram and its impact on how much lenders can recover when faced with continuing defaults that originated outside of the statute of limitations will almost certainly be taken up by the Florida Supreme Court. Although it is unclear how that Court will ultimately decide this issue, one Justice appears to already agree that all such 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., concurring) (arguing that “a missed payment does not trigger the running of the statute of limitations when acceleration is optional with the holder”).

The Gonzalez opinion is not final as the court granted a Motion for Extension of Time to File a Post Decision Motion for Rehearing through September 21, 2018. The Graybush opinion is not final until the deadline to file a motion for rehearing expires on August 30, 2018, or a timely filed motion for rehearing is disposed of by the court.