A Game-Changer on Motions to Dismiss

As a foreclosure defense attorney with foreclosure cases in many different counties before a wide array of judges, I’ve seen a significant difference in opinion, even among judges, about the merits of motions to dismiss in foreclosure cases.  Perhaps the biggest reason for the wide variety of opinions is the absence of case law from Florida’s appellate courts on the issue.  The problem is largely procedural – an order denying a motion to dismiss is not appealable until the end of the case, and by the time a foreclosure case is over, the homeowner’s best argument for appeal likely isn’t whether the Complaint stated a cause of action, but the propriety of the foreclosure itself.  What has resulted is an unusual dynamic where Florida circuit judges have been ruling on thousands upon thousands of motions to dismiss without clear direction from Florida’s appellate courts on what it takes for a bank to state a cause of action and survive a motion to dismiss.  That’s not an indictment of anyone – there just haven’t been appellate decisions that clearly address this standard. 

Suffice it to say I was elated to read this opinion from Florida’s Second District Court of Appeal.  Here is the key language …

On November 18, 2009, U.S. Bank filed another copy of the Note as a supplemental exhibit to its complaint.  In contrast to the copy attached to the complaint that contained no endorsements, this copy contained two endorsements …

We view U.S. Bank’s filing of a copy of the note that it later asserted was an original note as a supplemental exhibit to its complaint to reestablish a lost note as an attempt to amend its complaint in violation of Florida Rule of Civil Procedure 1.190(a).  U.S. Bank did not seek leave of court or the consent of Feltus to amend its complaint.  A pleading filed in violation of Rule 1.190(a) is a nullity, and the controversy should be determined based on the properly filed pleadings.  See Warner-Lambert Co. v. Patrick, 428 So. 2d 718 (Fla. 4th DCA 1983). 

Why is this language so significant?  Think about it.  How many instances are there in foreclosure cases where the note attached to the Complaint contains no indorsement, but the bank later files an indorsement that contains one, then tries to defeat a motion to dismiss by asking the court to consider the subsequently-filed indorsement? 

I see this all of the time – perhaps the majority of cases.  The Note attached to the complaint typically has no indorsement, yet the note filed thereafter does.  When I argue a motion to dismiss, I argue the court must stay within the confines of the “four-corners” of the complaint (black-letter law), which means the court can consider only the note attached to the complaint, not the note subsequently filed with an indorsement.  Bank lawyers, by contrast, want judges to consider the subsequently-filed note, arguing “we filed the original note, indorsed in blank, so we are the holder.” 

I’ve argued the impropriety of this argument before from the standpoint of “standing at inception,” i.e. if the bank lacked an indorsement when it filed the suit, it cannot cure that deficiency by obtaining the requisite indorsement thereafter.  See Progressive Express Ins. Co. v. McGrath Community Chiro., 913 So. 2d 1281, 1285 (Fla. 2d DCA 2005) (“the plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed.”). 

In its recent opinion, the Second District goes a step further.  It’s not merely an issue of the bank lacking standing at the inception of the case.  The court is not even allowed to consider the subsequently-filed note without the bank amending its complaint.  References to the subsequently-filed note, for pleading purposes, are “a nullity.” 

Everyone should be citing Feltus v. U.S. Bank when arguing motions to dismiss.  It’s time that banks stopped getting away with amending their pleadings via the filing of a note that contravenes the note attached to their complaints without leave of court and without the consent of all defendants.  See Fla.R.Civ.P. 1.190.  In other words, as soon as a bank’s lawyer has to resort to referencing a note that is not attached to the complaint when opposing a motion to dismiss, that shows the bank has failed to state a cause of action and either needs to amend its complaint or suffer a dismissal without leave to amend, as in Progressive.

Mark Stopa

Posted in Main | No Comments »

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Anti-Spam Quiz: