Consumer Finance Litigation

On April 1, 2020, Florida’s Third District Court of Appeal released its opinion in the case 78D Team, LLC v. U.S. Bank, N.A., etc., 3D 19-1708 (Fla. 3d DCA April 1, 2020). In this appeal, Burr successfully defended an appeal that challenged a payments order under Florida Statute 701.10(2), which permits trial courts in Florida to enter an order requiring monthly mortgage payments be made in foreclosure actions that do not involve owner occupied residential real estate. If payments are not made following such an order, the trial court can order the eviction of the property’s occupants or grant other relief.

The defendant in 78D Team, a third-party purchaser of the property in foreclosure (not the mortgagor) sought to avoid the payments order by asserting that the statute unconstitutionally impaired contract rights under the mortgage and because that the plaintiff had allegedly not demonstrated it was likely to prevail on the merits as required by the statute.

The trial court entered a payments order, holding the statute was constitutional and that the plaintiff was likely to prevail in the foreclosure action based upon the record presented to the trial court.

On appeal, Florida’s Third District Court of Appeal affirmed the trial court in a unanimous ruling, holding: “The Subsequent Purchaser concedes—and the record makes irrefutable—that it has never been in privity with any of the parties. Therefore, it lacks standing to challenge the allegedly unconstitutional impairment of the rights of parties to a mortgage with regard to which it was neither a party nor beneficiary.”  This holding is important because Florida Statute 701.10(2) does not apply to owner occupied residential real estate. Thus, many of the litigants who would like to avoid a payment’s order are third-party purchasers who rent out properties that are in foreclosure – parties to whom this same holding would likely apply.

With regards to the plaintiff’s standing and its likelihood of success on the merits, the Third District Court of Appeal found that the evidence of standing was sufficient to show that the plaintiff was the holder of the note.

Finally, as to the third-party purchaser’s attempt to challenge the assignment of mortgage to the plaintiff, the Third District Court of Appeal held that the third-party purchaser lacked standing to challenge the validity of the assignment as a non-party to that agreement. Alternatively, the Third District Court of Appeal held that the assignment was irrelevant to the plaintiff’s standing, because the evidence showed plaintiff was the holder of the note, applying the Third District Court of Appeal’s holding in HSBC Bank USA, Nat’l Ass’n v. Buset, 241 So. 3d 882, 889, 892 (Fla. 3d DCA 2018) and Aquasol Condo. Ass’n, Inc. v. HSBC Bank USA, Nat’l Ass’n, No. 3D17-3 352, 2018 WL 5733627, at *4 (Fla. 3d DCA Oct. 31, 2018).

A copy of the opinion can be found here.