Consumer Finance Litigation

The opinion of Florida's Third District Court of Appeal in Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575, 2014 WL 7156961 (Fla. 3d DCA Dec. 17, 2014) has been a lightning rod for criticism from federal courts in Florida. The opinion, which holds that only a dismissal with prejudice will serve to reset the statute of limitations for mortgage foreclosure following a failed foreclosure attempt, has already been rejected by three separate opinions of United States District Courts in Florida. See LNB-017-13, LLC v. HSBC Bank USA, No. 1:14-CV-24800-UU, 2015 WL 1546150 (S.D. Fla. Apr. 7, 2015); Summerlin Asset Mgmt. v Trust v. Jackson, No. 9:14-CV-81302, 2015 WL 4065372, at 1 (S.D. Fla. July 2, 2015); Stern v. Bank of Am. Corp., No. 2:15-CV-153-FTM29CM, 2015 WL 3991058 (M.D. Fla. June 30, 2015). Now add United States Bankruptcy Judge Cynthia C. Jackson to the list. In In re Richard S. Anthony, 14-bk-09462-CCJ (Bankr. M.D. Fla. July 20, 2015) Judge Jackson joined her federal court colleagues and rejected the Beauvais opinion's unique reading of the Florida Supreme Court's opinion in Singleton v. Greymar Assocs., 882 So. 2d 1004, 1007 (Fla. 2004). Instead, Judge Jackson held that "[t]he better view is that dismissals with and without prejudice operate in the same manner with respect to the statute of limitations in mortgage foreclosures, and that a lender in U.S. Bank's position here does not lose its right to enforce its note and mortgage merely because the statute of limitations has run as to earlier payment defaults. U.S. Bank remains free to accelerate and foreclose on the basis of later defaults. The note and mortgage are enforceable against the debtor and his property." So far, not a single federal court in Florida or other District Court of Appeal has published an opinion accepting the approach of the Beauvais opinion. The question now is will the Third DCA stand by its opinion or retreat from it in response to the motion for rehearing presently pending in Beauvais. While most motions for rehearing are summarily denied without a hearing, the Court has now set the motion in Beauvais for oral argument to be heard on November 12, 2015. The Court's order also invites several amici to brief the following legal issues for rehearing:

1. Where a foreclosure action has been dismissed with the note and mortgage still in default:

A. Does the dismissal of the action, by itself, revoke the acceleration of the debt balance thereby reinstating the installments terms?

B. Absent additional action by the mortgagee can a subsequent claim of acceleration for a new and different time period be made?

C. Does it matter if the prior foreclosure action was voluntarily or involuntarily dismissed, or whether the dismissal was with or without prejudice?

D. What is the customary practice?

2. If an affirmative act is necessary by the mortgagor to accelerate a mortgage, is an affirmative act necessary to decelerate?

3. In light of Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004), is deceleration an issue or is deceleration inapplicable if a different and subsequent default is alleged?

While many expect the Florida Supreme Court to reach these questions in the pending appeal U.S. Bank, N.A. v. Bartram, the Florida Supreme Court may not touch on all these issues since Bartram involves a dismissal with prejudice. See 140 So. 3d 1007, 1013 n. 1 (Fla. 5th DCA 2014) review granted, 160 So. 3d 892 (Fla. 2014). Thus, depending on the outcome of the motion for rehearing in Beauvas and the Bartram appeal, litigants may have to wait for a separate opinion of the Florida Supreme Court to resolve the certified conflict between Beauvias and the Fourth District Court of Appeals' decision in Evergrene Partners, Inc. v. Citibank, N.A., 143 So. 3d 954, 955 (Fla. 4th DCA 2014), reh'g denied (Aug. 27, 2014) unless the Third DCA sides with the majority view on its own. Until then, litigants re-filing foreclosures in the area controlled by the Third DCA are increasingly likely to file in federal court wherever diversity jurisdiction exists to avoid exposure to the Third DCA's unique view on the statute of limitations.