Consumer Finance Litigation

On October 31, 2018, Florida's Second District Court of Appeal recently distinguished two of its prior opinions and held that a foreclosure plaintiff does not lose its standing as a holder of a negotiable instrument if it surrenders a promissory note to the clerk of court for purposes of obtaining a foreclosure judgment, and later re-files the action without retaking possession of the note from the clerk.

Two prior opinions from the Second District Court of Appeal, Partridge v. Nationstar Mortgage, LLC, 224 So. 3d 839 (Fla. 2d DCA 2017) and Geweye v. Ventures Trust 2013-I-H-R, 189 So. 3d 231 (Fla. 2d DCA 2016) were often misinterpreted by foreclosure defense counsel as holding that a foreclosure plaintiff that surrenders the note and mortgage somehow loses the necessary standing to commence a new foreclosure action.

However, in the opinion issued in Deutsche Bank National Trust Company, etc. v. William Noll, 2D16-5635, the Second District Court of Appeal clarified its prior opinions, stating that:

"At issue in Partridge was a purported assignment of the mortgage, but not the note, after the original note was filed with the court in the prior foreclosure action instituted by a different plaintiff. Geweye, on which this court relied in Partridge, did not address whether the plaintiff had standing at the inception of the action. Rather, the court held that the substituted plaintiff lacked standing to enforce the note at the time of trial despite the original note having been in the court file because the evidence established the mortgage, but not the note, had been assigned to the plaintiff. This case does not turn on the effectiveness of a post-commencement assignment after the original note was surrendered to the clerk." (internal citations and quotations omitted)

Having distinguished Partridge and Geweye, the Second District Court of Appeal rendered an unambiguous holding that a foreclosure plaintiff who surrenders a promissory note to the clerk of court may re-file the foreclosure action without retrieving the note from the clerk of court. This is true because that plaintiff retained constructive possession of the note while it is with the clerk since the plaintiff was entitled to recover the note from the clerk upon demand. Specifically, the Second DCA holds:

"Here, while the note did remain in the direct, physical possession of the Clerk in the case file of the Prior Foreclosure at the time of filing the second action, Deutsche Bank was the plaintiff in both actions. And because Deutsche Bank retained the power to exercise control over the note, it had the possession necessary to establish that it was a holder with standing to file the later foreclosure action."

Given the frequency with which Partridge and Geweye were misinterpreted by foreclosure defense counsel, the opinion in Noll is important reading for anyone seeking to enforce negotiable instruments in Florida. It is worth noting the opinion is not binding until such time as the time for seeking rehearing has passed or rehearing has been denied.