Case Example of Foreclosure Defense Based upon Evidence of Payment.
For details of the case, read: Gulliver v. Texas Commerce Bank, 787 So. 2d 256 (Fla. Dist. Ct. App. 2001).
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On February 4, 1998, Texas Commerce Bank filed a complaint in a Florida civil court seeking to foreclose on the home of Rosemarie Gulliver, which was secured by a mortgage. In this court filing, Texas Commerce Bank included an allegation, submitted in the court filings under sworn oath, that Ms. Gulliver had not made any monthly mortgage payments for several months.
The last mortgage payment that was acknowledged by the Bank in the Original Complaint was the mortgage payment she had made in June 1997.
Texas Commerce Bank was an Assignee
Meanwhile back in July 1997, the mortgage had been assigned by the lender who had closed on the home loan with Ms. Gulliver to Texas Commerce Bank. An assignment of a loan essentially is a sale of the loan to another bank or lender. Here, Texas Commerce Bank bought the Gulliver mortgage (probably among a set of mortgages, sold all at once).
Banks Do Not Need Borrowers’ Okay to Sell Mortgages
Banks can sell mortgages without the knowledge or consent of the borrowers. The loans are considered assets of the lender, which it can sell as it wishes just like it would sell other assets, like computers, furnishings, etc.
Neither the original mortgage lender nor Texas Commerce Bank had any legal duty to get Ms. Gulliver’s approval before the sale of her mortgage was undertaken and finalized.
Notice of Default Sent to Borrower
A notice of default on the mortgage was sent in a letter from Texas Commerce Bank to Ms. Gulliver in September 1997. In the letter, Texas Commerce Bank notified the borrower that she was considered to be delinquent.
Monthly Payments Received and Held in Suspense Account
Meanwhile, Texas Commerce Bank kept receiving, and retaining in a “suspense” account, all the mortgage payments made by Ms. Gulliver after that date. Texas Commerce Bank never notified her that these monthly mortgage payments were being accepted for deposit but not applied to the debt.
Answer Filed in Foreclosure Lawsuit
Ms. Gulliver did not procrastinate in responding nor did she ignore the lawsuit. Instead, she hired a lawyer to represent her interests and defend her against the foreclosure action. The lawyer, Mr. Boncek, filed an Answer to the Complaint.
Included in this responsive pleading was the affirmative defense of payment. It was alleged as a defense to foreclosure that the monthly mortgage obligations, up to and following the filing of the foreclosure lawsuit, had been paid.
Motion for Summary Judgment Filed Asking for Foreclosure
Texas Commerce Bank then filed its Motion for Summary Judgment, asking the trial judge to enter judgment in its favor and allowing foreclosure on the home.
In its Motion for Summary Judgment, Texas Commerce Bank alleged, again under a sworn oath, that no mortgage payments had been made since the June 1997 payment.
Response: Defense of Payment
Ms. Gulliver filed her Response to the Motion for Summary Judgment. It included her affidavit, where she swore under oath that the payments had been made.
Attached to the Affidavit were copies of several of the checks sent to Texas Commerce Bank. The front and back of these checks were shown. The backs of the checks showed the endorsement of Texas Commerce Bank.
Cancelled checks can be submitted as evidence a borrower sent their monthly mortgage payments.
Reply to Payment Defense
When a Response to a Motion for Summary Judgment is filed, the movant (here, Texas Commerce Bank) has the right to file a “Reply” to the things contained in that Response. See, Rules 1.110, 1.510 of the Florida Rules of Civil Procedure.
Texas Commerce Bank sought to explain away those checks submitted by the borrower. So, in a “supplemental affidavit” filed in the court’s record, Texas Commerce Bank admitted under oath that while some monthly mortgage payments had been made by the borrower, the loan remained delinquent by a month or so at all times.
This “supplemental affidavit” sought to prove that Ms. Gulliver had not provided evidence of all her claimed monthly mortgage payments as were needed to be paid in order to avoid foreclosure on the home.
It showed that many monthly mortgage payments were received from Ms. Gulliver and kept in a segerated bank account (which Texas Commerce Bank called a “suspense” account).
Bank’s Attempts to Contact Borrower
Another fact that was asserted in this “supplemental affidavit” was that Texas Commerce Bank telephoned Ms. Gulliver about the mortgage problem. Under sworn oath, it was stated that while the Bank “attempted to contact the borrower,” it never reached her for a conversation and its messages were never returned.
While Texas Commerce Bank did mail its notice of default to Ms. Gulliver, it never tried to reach her by mail before that juncture. Its attempts to contact the borrower were solely by telephone.
All this time, however, Ms. Gulliver kept making mortgage payments and Texas Commerce Bank kept depositing those monthly checks in its “suspense account.”
Twist: Borrower’s Lawyer Moves to South Florida
A twist of fate then occurred which failed to help Ms. Gulliver. Her lawyer, Mr. Boncek, moved to South Florida. He took the Gulliver file with him to his new practice with a new law firm.
When Ms. Gulliver learned Mr. Boncek had moved, she contacted him at his new South Florida law office. However, when Texas Commerce Bank filed its Notice of Hearing on the Motion for Summary Judgment, it sent the Notice to Mr. Boncek’s old office address.
Notice Not Sent to Lawyer but to Borrower
Texas Commerce Bank was notified that the Notice of Hearing should be sent to Boncek’s new address. The Bank did not send it there.
Instead, Texas Commerce Bank sent a copy of its Notice to Ms. Gulliver.
When the time came for the Summary Judgment Hearing, no one appeared as counsel for the borrower, Ms. Gulliver. Texas Commerce Bank was there, all alone, to argue its right to a summary judgment to the trial judge.
The summary judgment was granted.
Texas Commerce Bank Service on Borrower’s Lawyer and Rule 1.080(b)
Afterwards, Texas Commerce Bank could not show that it bothered to send either (1) a copy of the final Summary Judgment or (2) the Notice that set the date of the Foreclosure Sale to the borrower, Ms. Gulliver.
Texas Commerce Bank did send a copy of the Summary Judgment to Mr. Boncek’s “old address.” Whether or not the “Notice of Foreclosure Sale” was sent with it was never made clear.
Note: Rule 1.080(b) of the Florida Rules of Civil Procedure required Texas Commerce Bank to serve the borrower’s attorney at his “last known address.” There was no question in this case that the lawyers for Texas Commerce Bank knew that Mr. Boncek had moved, and that his old law firm no longer represented Ms. Gulliver. Moreover, the record showed that Texas Commerce Bank’s counsel had contacted Mr. Boncek about the Gulliver matter at his new location.
Borrower Appeals the Summary Judgment
When Ms. Gulliver learned that the trial judge had granted a foreclosure summary judgment, she appealed to a higher court.
The appeals court ruled that the lack of Notice was “fatal” and that the defense of payment created a genuine issue of material fact which precluded summary judgment in the case.
Notice
Just sending a copy of a Notice of Hearing on Motion for Summary Judgment to a borrower who has hired an attorney to represent them is not sufficient. The Bank must formally notify opposing counsel of the hearing.
It is not an “acceptable substitute” to notify the represented borrower because they rarely attend a summary judgment hearing. Usually, the lawyers for each side are the only ones to appear at these hearings since summary judgment hearings do not involve the presentation of evidence.
That has all been done by affidavits that are filed in the court record long before the hearing itself. Therefore, notice to the respondent, Ms. Gulliver, is not an acceptable substitute for the required notice to her opposing counsel.
Payment as a Genuine Issue of Material Fact
The reviewing court found that the trial judge made an error when it granted the summary judgment request made by Texas Commerce Bank.
Payment is a meritorious defense to a motion for summary judgment seeking foreclosure on a Florida residence.
In the affidavits filed of record at the time of the Summary Judgment hearing, Ms. Gulliver asserted that all the payments had been made and she was “… NOT in default of the terms and conditions of the note and mortgage herein.”
Whether or not Ms. Gulliver had provided copies of some of the checks, but not all of them, did not gut her payment defense. The failure to provide all the endorsed checks as proof of payment instead created a factual issue on the question of payment.
She did swear in the affidavit that she was not in default because all the monthly mortgage payments had been made. This directly contradicts the assertions of Texas Commerce Bank, particularly its initial affidavit that stated NO payment had been made since June 1997 (even though Texas Commerce Bank was accepting her checks and depositing them).
“Disputed facts are not to be resolved by summary judgment.” The court ruled in Ms. Gulliver’s favor, reversed the foreclosure summary judgment, and returned the case to the trial court for further proceedings.
Need for Foreclosure Defense Lawyer in Summary Judgment Proceedings
In Florida, summary judgments are often requested by lenders as a fast way to foreclose on homes and condos, but all too often the bank’s actions are questionable in their aggressive tactics in getting that foreclosure judgment.
Anyone who has been making their monthly mortgage payments should know that if they get a notice of default much less are served with a foreclosure lawsuit, they need to defend against the bank’s actions with zeal. As demonstrated in this case, banks cannot be trusted to be up-front about things.
In Florida, if you have made all your monthly mortgage payments then you have a valid legal defense to a mortgage foreclosure action. Summary Judgments are precluded in these cases where there is a question about payments and if all the monthly payments were indeed made and received.
However, the defense must be formally asserted in a responsive pleading filed in the court’s record and the arguments regarding payment as a defense must be asserted in oral argument at any summary judgment hearing. This is where a Florida Foreclosure Defense lawyer is vital to protecting the best interests of the borrower who is challenging the attempts of a lender to take their property.
An experienced Florida real estate attorney can be much more economical than you may think. Most Florida real estate lawyers, like Larry Tolchinsky, will offer a free initial consultation to answer your questions.
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