Consumer Finance Litigation

Florida's Third District Court of Appeal shocked many court watchers with its opinion in Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575, 2014 WL 7156961 (Fla. 3d DCA Dec. 17, 2014) when it created a split of authority on Florida's statute of limitations for mortgage foreclosure. Before Beauvais, Florida's case law was consistent that a dismissal, be it with or without prejudice, permitted new non-time-barred causes of action for foreclosure to accrue based upon post-dismissal breaches of mortgage covenants. See Evergrene Partners, Inc. v. Citibank, N.A., 143 So. 3d 954, 955 (Fla. Dist. Ct. App. 2014), reh'g denied (Aug. 27, 2014); U.S. Bank Nat. Ass'n v. Bartram, 140 So. 3d 1007, 1013 n. 1 (Fla. 5th DCA 2014) review granted, 160 So. 3d 892 (Fla. 2014). The opinion in Beauvais acknowledged conflict with the Fourth District Court of Appeal, and held that only a dismissal with prejudice permitted future causes of action for foreclosure to accrue. Overnight, many foreclosure cases pending in Miami-Dade County's busy foreclosure courts became time-barred. However, for the third time in a row, the opinion has failed to garner the support of a Florida federal District Court judge forced to pick between the two divergent strains of thought on the issue. In Stern v. Bank of Am. Corp., No. 2:15-CV-153-FTM-29CM, 2015 WL 3991058 (M.D. Fla. June 30, 2015) United States District Court Judge John Steele became the third consecutive United States District Court Judge in Florida to reject the Third DCA's ruling in Beauvais, describing Beavais as "contrary to the overwhelming weight of authority which holds that even where a mortgagee initiates a foreclosure action and invokes its right of acceleration, if the mortgagee's foreclosure action is unsuccessful for whatever reason, the mortgagee still has the right to file later foreclosure actions . . . so long as they are based on separate defaults." (internal quotation marks omitted). Judge Steele joins District Court Judges Urusala Ungaro and Robin Rosenberg who also declined to adopt Beauvais' holding that the distinction between dismissal with, as opposed to without, prejudice is dispositive for purposes of a statute of limitations analysis. 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). So far, no Florida court has sided with the Third DCA on the issue. A motion for rehearing has been pending in Beauvais for several months. It is possible that even the Third DCA is unsure of its opinion in Beauvais. Interested parties may have to wait for a pronouncement from the Florida Supreme Court in Bartram for any clarity on the issue at the state court level. Until then, the United States District Court for the Southern District of Florida is sure to see an increase in foreclosure filings where diversity jurisdiction is available as litigants seek to avoid the effects of the Third DCA's outlier opinion by re-filing in federal court.