The Bowin Law Group's Florida foreclosure attorney has represented thousands of Brevard county families in defending the foreclosure of their homes. We have been successful in saving many homes and helped families get back on track with their mortgages through loan modifications. We have also been successful in defending the foreclosure in Court, getting the foreclosures dismissed at trial and sometimes earlier. When necessary, we have appealled foreclosure judgments where the trial court erred in granting the judgment to the bank. We have done these appeals for our clients as well as on referral from other foreclosure attorneys in town, most of whom do not handle appeals.
Below is another example of an appeal we won, resulting in a reversal of the trial court's foreclosure judgment and a dismissal of the foreclosure case. The issue, just as in Part 2 published on this blog September 29, 2018, was whether the bank had "standing" to sue on the loan. Below is the successful argument we presented on appeal:
STATEMENT OF THE FACTS
Lack of Standing
The promissory note ("Note") was issued to Fidelity Federal Bank & Trust. [Original Note, Record pages 273-277]. The Note contains no endorsements. On July 21, 2008, National City Mortgage filed the instant foreclosure action. The complaint alleged that National City Mortgage was the party entitled to enforce the note, and asserted a lost note count. [Record, pages 44 – 65]. National City Mortgage did not attach a copy of the lost Note to the complaint.
On June 21, 2010, National City Mortgage filed a motion to substitute PNC Bank National Association ("PNC") as the new plaintiff. [Record, page 70]. The motion referenced an alleged assignment of the loan from National City Mortgage to PNC as the alleged successor by merger to Fidelity Federal Bank & Trust. The motion did not attach any evidence of the alleged assignment. On June 4, 2014, the Fieldings filed their answer and affirmative defenses, which denied standing and National City Mortgage's compliance with the notice requirements of paragraph 22 of the mortgage. [Record, pages 201 – 203]. The affirmative defenses were amended and restated on March 3, 2015. [Record, pages 217 – 219]. The matter went to trial on January 7, 2016.
At trial, PNC offered into evidence two documents purporting to be official records of the Comptroller of Currency, Administrator of National Banks. [Record, pages 268 – 272]. Neither document contained the seal of the Comptroller of the Currency or a signature from the custodian of the record verifying the authenticity of the seal. The first document, dated August 14, 2007, purported to show the conversion of Fidelity Federal Bank & Trust (the loan originator) into Fidelity Federal, National Association. The document then purports to show a merger of Fidelity Federal, National Association into National City Bank, Cleveland, Ohio, which was simultaneously renamed National City Bank. This alleged official record in no way references National City Mortgage, the original plaintiff in this foreclosure, or its relation to any of the identified entities. The trial court admitted the August 14, 2007 document into evidence over the Fieldings' hearsay and authenticity objections. [Transcripts, page 25, line 13 though page 31, line 15].
The second of the two alleged merger documents, dated November 6, 2009, purported to show a merger between National City Bank, Cleveland, Ohio with PNC. The Fieldings' counsel did not object to the second merger document being admitted into evidence. As with the August 14, 2007 merger documents, there is no reference to National City Mortgagein the November 6, 2009 letter, nor was there any reference to National City Mortgage's relationship to the other entities. These merger documents provided no link between Fidelity Federal Bank & Trust (the loan originator) and National City Mortgage (the original plaintiff).
PNC's witness, Mr. Jerome, testified that the merger of National City Bank, Cleveland, Ohio into PNC occurred on November 6, 2009, which is the date of the second merger letter. [Transcripts, page 23, line 21 through page24, line 3]. On their face, however, both the August 14, 2007 document and the November 6, 2009 document were nothing more than "conditional" approvals of the referenced mergers. Both documents specified certain actions the entities must take before the mergers would be officially approved. If the conditions were not met, the Comptroller required that the certifications be returned. There is nothing in the record to establish that the entities satisfied the Comptroller's conditions or that the alleged mergers were finally approved.
Even if the mergers were finally approved, there is still nothing in the record, through testimony or otherwise, to establish that National City Mortgageever had the right to enforce the Note. National City Mortgage was not referenced in either of the merger documents. Nor was there any testimony to explain the relationship between National City Mortgage and the other entities. Mr. Jerome did not state whether National City Mortgage merged with PNC during PNC's merger with National City Bank, or whether National City Mortgage was left out of the merger to operate as an independent company. Indeed, PNC's witness never once mentioned National City Mortgage's name through his entire testimony.
There were also no assignments of mortgage showing any alleged transfers of the Note between National City Mortgage and any of the other entities. In short, there is no record before the trial court or this Court to show any relationship between National City Mortgage and the Note at issue. Pursuant to the record before the trial court, National City Mortgage was a stranger to the Note with no right to enforce it and no right to file this foreclosure action.
Even ignoring the obvious gap in the chain of title for this Note, and the lack of any evidence as to National City Mortgage's standing at the inception of this case, there was also no evidence that PNC had the right to enforce the Note on the day of trial. While Mr. Jerome testified that National City did "purchase all of the assets of Fidelity" during the alleged 2007 merger, the record is silent as to whether PNC purchased all of the assets of National City Bank during the 2009 merger. [Transcripts, page 47, lines 9 – 11]. Absent evidence PNC purchased all or any of National City Bank's assets during the alleged 2009 merger, the merger does nothing to establish PNC's rights to enforce the Note.
PNC failed to prove National City Mortgage's right to enforce the Note at the inception of this case.
The Note in this case originated with Fidelity Federal Bank & Trust. [Original Note, Record pages 273-277]. For PNC to prove National City Mortgage's standing at the inception of this case, it would need to prove the chain of title between the originator of the loan, Fidelity Federal Bank & Trust, and National City Mortgage, the entity that filed this foreclosure complaint. PNC failed to present any evidence to make this link.
The original plaintiff in this action was National City Mortgage. The Note contained no endorsements to National City Mortgage or in blank. The only evidence PNC presented to establish the chain of title for the Note were the two "official records" from the Office of the Comptroller, neither of which contained a seal from the custodian of the official record or a signature of the custodian certifying the authenticity of the seal. [Record, pages 268 – 272]. Even accepting the letters as "official records", the records on their face were merely "conditional approvals" requiring the parties to perform certain acts before the mergers could be finally approved. There was no evidence in the record, by testimony or otherwise, to establish that those necessary conditions were met. That failure in and of itself breaks the link between Fidelity Federal Bank & Trust and any alleged successors by merger.
Perhaps more importantly, the alleged mergers do not reference National City Mortgage in any capacity. The records reference a merger between Fidelity Federal Bank & Trust and National City Bank, Cleveland, Ohio, which was simultaneously renamed National City Bank. There is no mention of National City Mortgage's relationship to National City Bank or any of the other named entities.
Even if National City Mortgage was a subsidiary of National City Bank (for which there is no evidence), National City Bank's alleged merger with Fidelity Federal Bank & Trust would have conferred no rights in the Note to National City Mortgage. The law is clear that, for establishing standing in a foreclosure case, a subsidiary and its parent are separate entities, and the rights of one of the entities to enforce a note is not imputed to the other. See Wright v. JP Morgan Chase Bank, N.A., 169 So.3d 251, 252 (Fla. 4th DCA 2015) ("Thus, ownership of the note by subsidiary Chase Bank does not give parent corporation JPMorgan Chase the right to enforce the note, absent evidence that JPMorgan Chase acquired such a right through, for example, a purchase or servicing agreement."); Sanchez v. Suntrust Bank, 179 So.3d 538, 542 (Fla. 4th DCA 2015) (same). There was no evidence that National City Bank ever transferred any rights in the Note to National City Mortgage.
National City Mortgage was the wrong legal entity to file this foreclosure as of July 21, 2008 when it filed the instant complaint. Because National City Mortgage lacked standing at the inception of this case, this foreclosure must be dismissed. See Figueroa v. Fed. Nat. Mortg. Ass'n, 180 So. 3d 1110, 1115 (Fla. 5th DCA 2015) ("a party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.") (citing Venture Holdings & Acquisitions Grp., LLC v. A.I.M Funding Grp., LLC, 75 So.3d 773, 776 (Fla. 4th DCA 2011).
Since standing is determined as of the inception of the case, it is irrelevant whether PNC gained title to the Note during this foreclosure case. Id; accord Russell v. Aurora Loan Servs., LLC, 163 So. 3d 639, 642 (Fla. 2d DCA 2015) ("A substituted plaintiff acquires only the standing of the original plaintiff."). However, just for the sake of argument, PNC also failed to establish its rights to enforce the Note at the time of trial. PNC's claim to the Note is based on its alleged 2009 merger with National City Bank, Cleveland, Ohio on November 6, 2009 (1 year after the foreclosure was filed). However, the August 14, 2007 merger document reflects that National City Bank, Cleveland, Ohio purportedly merged out of existence in 2007.
Even if PNC's merger was with the surviving National City Bank entity, there is nothing in the record to establish that PNC purchased all or any of National City Bank's assets in the merger. Absent such testimony, the fact that a merger took place does nothing to establish that PNC acquired the right to enforce the Note during that merger. See Kyser v. Bank of America, N.A., 2016 WL 699133, 2 (Fla. 1st DCA 2016) ("While Appellee's witness also testified that Appellee and Countrywide merged, she gave no testimony that Appellee acquired all or any of Countrywide's assets."). See also Fiorito v. JP Morgan Chase Bank, Nat'l Ass'n, 174 So.3d 519, 521–22 (Fla. 4th DCA 2015) (holding that the appellee failed to establish standing to sue for foreclosure where the bank officer testified that the appellee merged with "WAMU" but never testified that the appellee acquired all of WAMU's assets). Because PNC did not provide any evidence that it purchased all or any of National City Bank's assets, it failed to prove any right to enforce the Note arising from the merger.
Because PNC did not establish its right to enforce the Note at the time of trial, this case must be dismissed. See Bowmar v. SunTrust Mortg., Inc., 188 So. 3d 986, 988 (Fla. 5th DCA 2016) ("A foreclosure plaintiff must have standing at both the time when the foreclosure complaint is filed and when the final judgment is entered."); accord Beaumont v. Bank of New York Mellon, 81 So.3d 553, 555 (5th DCA 2012) ("Mellon [as substituted party] must prove its right to enforce the note as of the time the summary judgment is entered…").
For the foregoing reasons, the Fieldings request that this Court reverse the foreclosure judgment and remand this case with instruction to dismiss.