Consumer Finance Litigation

The Florida Fourth DCA opinion in Shahar v. Green Tree Servicing, 38 Fla. L. Weekly D563d (Fla. 4th DCA March 6, 2013) demonstrates the dangers of inadequately addressing each and every affirmative defense raised by a foreclosure defendant. In Shahar, the appellate court reversed the trial court's entry of summary judgment where the lender did not factually or legally refute the defendants' unclean hands defense. The defendants' Verified Amended Answer, Affirmative Defenses and Counterclaim included allegations that the lender had engaged in a variety of inequitable and potentially illegal behavior. Among other things, the defendants alleged that the lender had, without the defendants' knowledge, altered the defendants' income information, changed the loan to a "stated income" loan to avoid detection, and then destroyed documents. Although the actual unclean hands affirmative defense comprised of only a single paragraph, the court held that it incorporated by reference the lengthy allegations found within the remainder of the pleading. In support of its motion for summary judgment, the lender merely submitted an affidavit from the lender's vice president stating that it was the owner and holder of the note, and that the defendants had defaulted under the terms of the note. The affidavit did not, however, address any of the allegations relating to the banks inequitable conduct and the defendants' unclean hands defense. The lender's only reference to the unclean hands defense was a bare legal argument that the unclean hands defense was legally insufficient. In reversing summary judgment, the court stressed that "in order for a plaintiff to obtain a summary judgment when the defendant asserts affirmative defenses, the plaintiff must either disprove those defenses by evidence or establish the legal insufficiency of the defenses." E. Qualcom Corp. v. Global Commerce Ctr. Ass'n, 59 So. 3d 347, 352 (Fla. 4th DCA 2011). This rule remains true, even where the defense might ultimately be rendered fruitless or unprovable, and where the non-moving party's chance for success may be minimal at best. Here, the lender's cursory treatment of the unclean hands defenses completely failed to rebut the defendants' factual allegations. Consequently, the court reversed the entry of summary judgment. Foreclosure practitioners are well accustomed to seeing certain affirmative defenses raised as a matter of course. See, e.g. Congress Park Office Condos II, LLC v. First-Citizens Bank & Trust Co., 105 So. 3d 602 (Fla. 4th DCA 2013) ("A common problem we encounter in mortgage foreclosure appeals is that the appellant slings legal terminology in a brief-fraud, unclean hands, estoppel, TILA violation-without tying the legal concept to any set of realworld facts established in the trial court."). However, Shahar serves as a strong reminder that a movant for summary judgment bears the burden to account for each affirmative defense raised by the non-movant, no matter how poorly pleaded or improbable. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.