Archive for March 13th, 2013

Is a Foreclosure Plaintiff “likely” to prevail merely by filing suit?

The foreclosure world is abuzz this week on the heels of Friday’s decision from Florida’s Second District Court of Appeal in Deutsche Bank Nat’l Trust Co. v. Prevratil, where the Second District ruled that Deutsche Bank could satisfy its obligation to verify the foreclosure complaint under Fla.R.Civ.P. 1.110(b) by having its servicer and attorney-in-fact, Select Portfolio Services, sign the verification.  While some (plaintiffs’ attorneys) would argue this decision clarifies the question of who can verify a foreclosure complaint, I think the decision poses more questions than it answers.

For instance, the Second District explains at length that SPS was authorized to verify for Deutsche Bank because a written Power of Attorney from Deutsche Bank, which POA was filed in the case, authorized such.  For me, that just begs the question – can an attorney-in-fact verify for the Plaintiff under Rule 1.110(b) only when the power of attorney is filed?  The Prevratil decision does not answer that question.  Likewise, the Second District does not explain whether a servicer could verify outside the confines of an attorney-in-fact relationship.  Suffice it to say that until these questions are answered on the appellate court level, the arguments will continue in lower courts throughout Florida.

These issues aside, what really struck me about the Prevratil decision was one sentence:

If Deutsche Bank filed the Amended Complaint as directed by the trial court, it likely would obtain a foreclosure judgment. 

Think about that sentence for a minute.  And look at the opinion.  Do you notice how that statement is unsupported by any legal citations or facts?  Yes, incredibly, the Second District has concluded a foreclosure plaintiff is “likely” to prevail merely by filing a lawsuit.  No factual explanation.  No legal citations.  Just “likely” to win.

With all due respect, can you imagine this type of statement in any other context?  How about a criminal case … can you imagine a criminal court ever saying a defendant on trial for murder is “likely” to be convicted merely because he/she was charged?  Or that a personal injury plaintiff is “likely” to win at trial merely because he/she filed suit?

Under Florida law, one never assumes one side or the other is going to win.  To illustrate, in the context of obtaining a temporary injunction, Florida courts have long required some type of evidence – certainly something more than the filing of a complaint – to support a conclusion that one is “likely” to prevail.  See City of Jacksonville v. Naegele Outdoor Advertising Co., 634 So. 2d 750 (Fla. 1st DCA 1994) (temporary injunction reversed where plaintiff did not prove she was likely to prevail).

I firmly believe the legal standard in this regard should not differ simply because this was a foreclosure case.  In fact, in my view, that’s a big part of the problem in foreclosure-world … to many people merely assume the plaintiffs are going to win merely because they’ve filed suit.

As a defense attorney, I find the assertion that a plaintiff is “likely” to win merely because it filed suit offensive.

You might think “ahhh, what’s the big deal.  It’s just one sentence in a long opinion.”

True, but it’s a very significant sentence.  After all, to grant certiorari (the relief granted in this case), the Second District had to conclude plaintiff was “likely” to win.  You see, when a lower court issues an order in a case but the case is not yet over (an interlocutory order), that order is typically not appealable until the conclusion of the lawsuit.  It doesn’t matter how wrong the order might be – you can’t appeal until the case is over.  That might sound odd, but that’s a long-established appellate rule in Florida, designed to eliminate piecemeal appeals.  Here, that’s precisely what the lower court did – issue an order adverse to a bank, but the case was still pending.  It was an interlocutory order, generally not subject to appeal until the case was over.

There are exceptions to that rule, but they are very limited.  Very rarely can anyone appeal an order while the case is still pending, particularly on a motion to dismiss.  One such exception is certiorari, but that’s an incredibly high standard.  It requires one to establish the order causes ”irreparable injury” that is “unlikely to be remedied” by appealing at the end of the case.  As an appellate attorney, I assure you that certiorari upon an interlocutory order is extremely rare.  In other words, the Second District had to go out of its way to grant the bank certioari relief – flying in the face of long-established precedent which precludes an appeal at this stage of the case.  To put it in layman’s terms, it’s as if the court concluded ”the bank is “likely” to prevail, so it won’t have a chance to appeal at the end of a case, so we need to grant relief now, as otherwise there won’t be an occasion to rule on this issue.”

With respect to the judges who authored this opinion, I very much disagree with that conclusion.  But rather than just disagreeing in silence, I decided to try to do something about it.

To be clear, this was/is not my case.  I’m not counsel, and I was not involved.  That said, I couldn’t just sit back and not try to do something.  Hence, I filed this Motion to Appear as an Amicus and Motion for Rehearing.  In doing so, I showed the Second District the actual statistics, from Florida Supreme Court, of all foreclosure cases in Florida from July through October, 2012.  While the Second District asserted a plaintiff is “likely” to obtain a foreclosure judgment, I pointed to the fact that 38,349 foreclosure judgments were entered in this time period – but 30,130 cases were dismissed.  I noted that there were nearly as many dismissals as judgments entered in the Sixth Judicial Circuit (the circuit from which this appeal emanated).  And I explained how those figures included all cases – not just contested cases, as was this case.  Undoubtedly, the likelihood of dismissal in a contested case is much higher, as there is a greater chance of a bank winning when the homeowner is not putting up any defenses.  I then recounted my own experiences, where I explained that I’ve had many more cases dismissed than I’ve had judgments entered.  On these facts, how can anyone conclude a bank is “likely” to win merely by filing suit?  If there is a basis for that conclusion, then ok – tell me what it is.  As things now stand, I just don’t see it.

I don’t know if the Second District will do anything about the motion I filed.  I wasn’t involved in that case, and there’s a fair chance they’ll just deny the motion without explanation.  That said, I just couldn’t sit back and allow a ruling to be made that a foreclosure plaintiff was “likely” to prevail merely by filing suit.  With all due respect, that just isn’t so.

Mark Stopa

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