Case Example of Precluding Foreclosure Summary Judgment Based Upon Bank’s Failure to Comply with 30-Day Notice
For details of the case, read: Cobbum v. Citimortgage, Inc., 158 So. 3d 755 (Fla. Dist. Ct. App. 2015).
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Christy Cobbum and Patrick Downey first bought their home here in Florida with a home loan from ABN AMRO Mortgage Group, Inc.; however, like many Florida home owners they were soon dealing with another lender, as their original mortgage lender merged with CitiMortgage, Inc.
When Ms. Cobbum and Mr. Downey ran into financial difficulties, they were faced with dealing with CitiMortgage as the new lender owning the note. Unable to avoid default and resolve their situation with CitiMortgage, Ms. Cobbum and Mr. Downey were faced with a civil foreclosure lawsuit filed by CitiMortgage.
When the lenders’ own mortgage documents include a 30 day deadline, then the bank needs to meet that deadline.
Borrowers File Answer to the Foreclosure Complaint
The two borrowers did not procrastinate after being served with the CitiMortgage complaint. They found a foreclosure defense lawyer to help them fight against the foreclosure. Then they filed a formal answer in the CitiMortgage lawsuit.
In their Defendants’ Original Answer, they went paragraph by paragraph through the Complaint, admitting to some of the assertions while reserving their right to assert defenses as necessary.
Specifically, they generally admitted to the paragraphs describing how CitiMortgage had complied with the necessary conditions precedent to filing the foreclosure lawsuit.
They also reserved their right to amend their Original Answer in order to add any defenses that (1) could not be articulated at that time; or (2) were discovered during the course of the litigation.
What are Amended Answers in a Foreclosure Lawsuit?
If any civil foreclosure lawsuit, it is very important for the borrower to file a response to the bank’s lawsuit before its filing deadline. Failure to do so can give the bank the opportunity to ask for a “default judgment” because there has been no filed response. Borrowers must act fast.
However, as shown by Ms. Cobbum and Mr. Downey, this first filing need not be the only response that is filed by the borrowers. As the lawsuit proceeds, the borrowers may file several “Amended Answers” or “Supplemental Answers” to the bank’s claims. There are times the borrowers may go so far as to counter-sue the bank in what is called a “Counterclaim.”
While an Original Answer needs to be prepared and filed before the filing deadline after a borrower has been served with a foreclosure lawsuit, he or she need not worry that something may be missed by acting quickly. Their Answer can be revised and expanded over time, as needed, with additional facts and legal responses to the bank’s attempts to foreclose.
CitiMortgage Files Motion for Summary Judgment to Foreclose on the Home
The bank was anxious to take title to the property. It filed a motion with the trial court asking for the judge to grant CitiMortgage with a summary judgment allowing it to foreclose.
Pursuant to Rule 1.510 of Florida Rules of Civil Procedure, this request allows a bank to avoid any jury trial or any lengthy discovery process, and get an “immediate” judgment allowing foreclosure, if it can show the judge that “… the pleadings and summary judgment evidence on file show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Ms. Cobbum and Mr. Downey were served with this motion and they formally responded to it, as required under Rule 1.510(c) of Florida Rules of Civil Procedure. This meant filing a formal affidavit in the court’s record for the judge to consider when he heard the bank’s motion.
Borrowers File Affidavit in Defense against the Bank’s Motion for Summary Judgment
In this affidavit, the borrowers swore (“averred”) that CitiMortgage had failed to provide them with the thirty-day (30 day) acceleration notice that was required by paragraph 22 of the Mortgage.
As a borrower named in the loan documents, Ms. Cobbum swore that filing the thirty-day acceleration notice was a condition precedent to the institution of the mortgage foreclosure action.
She argued that by failing to serve this 30-Day notice, CitiMortgage failed to comply with a condition precedent to the filing of the foreclosure.
Their defense: the court should deny CitiMortgage’s motion for summary judgment because CitiMortgage did not follow the mortgage’s notice provision to give an acceleration notice thirty days before it filed its foreclosure lawsuit.
What is a Condition Precedent?
Conditions precedents are not laws or regulations. Instead, they are creations of private parties, placed into contract language. These provisions can describe all sorts of acts or events that that must exist or occur before a party to the contract has a duty to perform a promised action.
In all Florida mortgages, conditions precedents are commonplace. When any bank wants to foreclose on a home, the conditions precedent must have been honored. Conditions precedents are tasks that a lender must perform before it can lawfully file a foreclosure action.
For more on conditions precedent, read: “Conditions a Bank Must Satisfy Before Filing a Foreclosure in Florida.”
Summary Judgment Granted; Reversed on Appeal
A hearing was held on CitiMortgage’s motion for summary judgment. Its lawyers argued that the borrowers’ sworn affidavit was insufficient to create a material issue. This was because Ms. Cobbum and Mr. Downey had admitted in their Answer that all conditions precedent had been met by the bank and they did not list any affirmative defenses in that Answer.
In reply, the foreclosure defense lawyer explained that when the Original Answer was drafted, finalized, and filed with the court record, it was not known by the defendants if Ms. Cobbum and Mr. Downey had received their formal Notice of Acceleration. Accordingly, the Original Answer was prepared without raising that affirmative defense.
The lawyer explained that Ms. Cobbum believed the filed Affidavit would be sufficient to raise the issue at the summary judgment hearing. The judge disagreed. The foreclosure defense lawyer orally moved for leave to amend the answer to assert the affirmative defense of failure to comply with the thirty-day notice as a condition precedent.
The court denied the defense request, noting on the record that the defense had not been pled in the Answer, while Ms. Cobbum’s affidavit was filed long before the summary judgment hearing (three (3) months).
Amending of the Borrower’s Pleading
The borrowers’ appealed their case to the reviewing court. They won, and the summary judgment was reversed with the case returned to the trial court for consideration of the bank’s failure to meet its condition precedent.
Amending Borrowers’ Answers Almost Always Allowed in Foreclosure Actions
Borrowers should be allowed to amend their pleadings in foreclosure actions, as a general rule. When a trial judge refuses to permit an amendment by the borrower, he is in error unless it is clear that:
- Amendment by the borrower would prejudice the bank;
- Amending has happened quite a lot, with the borrower abusing the privilege; or
- It would not matter; any amendment would be futile.
Laurencio v. Deutsche Bank Nat’l Trust Co., 65 So.3d 1190, 1193 (Fla. 2d DCA 2011) (citing S. Developers & Earthmoving, Inc. v. Caterpillar Fin. Servs. Corp., 56 So.3d 56, 62-63 (Fla. 2d DCA 2011)).
Courts have also ruled that borrowers should be given even more opportunity to amend their Answer when they are defending against foreclosure in court, before the judge at a summary judgment hearing. Laurencio, 65 So.3d at 1193 (listing of cases).
Additionally, the procedural rules governing all civil actions are clear: leave to amend should be “… given freely when justice so requires.” Rule 1.190(a) of the Florida Rules of Civil Procedure.
In the foreclosure action against Ms. Cobbum and Mr. Downey, there was no evidence that an amendment of their Answer would prejudice CitiMortgage. The bank was far from surprised here.
The Bank Did Not Respond to the 30-Day Notice Argument
CitiMortgage was aware that Ms. Cobbum and Mr. Downey challenged the summary judgment motion because of the bank’s failure to comply with its own thirty-day notice requirement. CitiMortgage understood the borrowers were asserting this foreclosure defense for at least three months prior to the summary judgment hearing.
Meanwhile, CitiMortgage did not attach to its complaint any documentation of its compliance with paragraph 22 of the Mortgage. It never tried to amend its pleadings regarding notice. Nor did CitiMortgage file any affidavit asserting that it had complied with paragraph 22 after the issue was raised by Ms. Cobbum.
The bank never countered the assertion by the borrowers that it had failed to meet its own condition precedent to filing the foreclosure action. It tried to move forward with foreclosure on the borrowers’ home solely on a procedural argument that the borrowers had not amended their Answer in time.
Genuine Issue of Material Fact: the 30 Day Notice
Accordingly, whether or not the lender had complied with the 30-Day Notice requirement detailed in the mortgage’s paragraph 22 created a disputed issue of material fact. See Ramos v. Sabadell United Bank, N.A., 137 So.3d 557, 557 (Fla. 4th DCA 2014).
When there is a genuine issue of material fact, the judge cannot grant a motion for summary judgment. Rule 1.510 of Florida Rules of Civil Procedure.
Foreclosure Defense Lawyer Stops Foreclosure Summary Judgment
This case is an example of an aggressive foreclosure defense against a bank that failed to follow the deadlines provided in its own mortgage documents. Here, the lender went ahead to file a foreclosure lawsuit against the borrowers, and had the audacity to argue the borrowers missed their deadline to challenge the bank’s own failure to provide the acceleration notice at least 30 days ahead of filing suit.
Pleadings in a foreclosure case are important, as are the underlying documents supporting both the bank’s complaint and the borrower’s answer.
Borrowers must file their Answers fast in order to avoid a default judgment. They also need to amend those Answers on a timely basis to avoid a judge granting an antagonistic lender’s motion for summary judgments and the need to appeal that ruling to the reviewing court.
For more, read: 3 Types of Foreclosure Defenses In Florida.
An experienced Florida real estate attorney can help borrowers defend against foreclosure actions and summary judgment motions filed by lenders. Most Florida real estate lawyers, like Larry Tolchinsky, will offer a free initial consultation to answer your questions.
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