Fogarty v. Nationstar Mortgage, LLC ( 2017 )

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
BRIAN FOGARTY and
CHRISTINE FOGARTY,
Appellants/Cross-Appellees,
v. Case No. 5D16-3193
NATIONSTAR MORTGAGE, LLC,
and SEAGROVE NEIGHBORHOOD
ASSOCIATION, INC.,
Appellees/Cross-Appellants.
______________________________________/
Opinion filed August 4, 2017
Appeal from the Circuit Court
for St. Johns County,
A.W. Nichols, III, Senior Judge.
D. Brad Hughes and Kayla A. Haines, of
Jimerson & Cobb, P.A., Jacksonville, for
Appellants/Cross-Appellees.
Nancy M. Wallace, of Akerman LLP,
Tallahassee, William P. Heller,of Akerman
LLP, Fort Lauderdale, and Eric M. Levine,
of Akerman LLP, West Palm Beach, for
Appellee/Cross-Appellant, Nationstar
Mortgage, LLC.
Michael J. McCabe and Michelle P.
Haines, of McCabe Law Group, P.A.,
Ponte Vedra Beach, for Appellee/Cross-
Appellant, Seagrove Neighborhood
Association, Inc.
WALLIS, J.
Brian and Christine Fogarty ("Borrowers") appeal a final judgment of foreclosure
in favor of Nationstar Mortgage, LLC ("Nationstar"), arguing the trial court improperly
denied their motion for involuntary dismissal. In its cross-appeal, Nationstar argues the
trial court erred by omitting interest and escrow from the judgment and by dismissing
appellee/cross-appellant, Seagrove Neighborhood Association, Inc. ("Seagrove"), as a
superior lienholder. We affirm the trial court's denial of Borrowers' motion for involuntary
dismissal without discussion. However, because the trial court improperly excluded
interest and escrow amounts, we reverse and remand for modification of the final
judgment. Additionally, we reverse the trial court's dismissal and remand for Seagrove's
reinstatement as a party to the foreclosure action.
FACTS
In 2007, Borrowers executed a note and mortgage for $352,000 in favor of
SunTrust Mortgage, Inc. ("SunTrust"). In December 2010, Nationstar sent Borrowers a
welcome letter notifying them that it had replaced SunTrust as the servicer of their
mortgage. In April 2013, Nationstar sent Borrowers a default letter, alleging a default date
of November 11, 2009, and requiring the immediate payment of $124,082.20 to cure the
default. After Borrowers failed to cure the default, Nationstar filed a foreclosure complaint,
seeking "$340,795.31 that is due on principal on the Note and Mortgage, interest from
October 1, 2009, late charges, costs of collection and reasonable attorney's fees, and
such other expenses as may be permitted by the mortgage." The complaint also included
Seagrove as a defendant, explaining that any interest it may claim in the mortgaged
property "is subordinate, junior, and inferior to the lien of [Nationstar's] Mortgage."
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Seagrove filed an answer and affirmative defenses seeking, inter alia, "a judgment
determining that [Seagrove's] interest is superior to [Nationstar's] mortgage," and citing
the recorded declaration of charter, easements, covenants, and restrictions for the
neighborhood to support its entitlement to expenses and assessments. Borrowers also
answered the complaint, asserting, as affirmative defenses, lack of standing, failure to
satisfy a condition precedent, and lack of certification.
The case proceeded to trial in March 2016. At trial, Nationstar called one of its
senior default case specialists. Through this witness, Nationstar successfully admitted the
note, the mortgage, the welcome letter, the default letter, and its payment history for the
mortgage. At the close of trial, Borrowers moved for involuntary dismissal, arguing the
trial court improperly admitted the loan payment history and, thus, Nationstar failed to
establish the amount due. Borrowers further argued the evidence failed to establish any
amounts other than the principal, such as interest or escrow. Seagrove also moved for
involuntary dismissal, arguing Nationstar presented no evidence to rebut Seagrove's
claim that it had a superior lien position relative to the mortgage. In response to
Seagrove's motion, Nationstar requested judicial notice of the recorded general warranty
deed for the subject property, as well as the recorded mortgage, to show that, as a first
mortgage, it had "priority over the homeowner's association lien." The trial court ultimately
ruled as follows:
Based on the testimony that I received today and the
arguments that were made, I'm going to deny the motion for
involuntary dismissal; however, I'm going to find for-- the only
testimony that I think I can definitely put my finger on is the
amount of principal that was described. So I'm going to find
for the plaintiff in the principal amount of $340,795.31. And
that is -- and find that the homeowner's association, who is
Seagrove Neighborhood Association, Inc., as their lien is
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superior to the mortgage and they are not foreclosed; they are
dismissed from the action.
Accordingly, the final judgment of foreclosure awarded Nationstar only the principal
balance of $340,795.31.
INTEREST AND ESCROW
Nationstar argues the trial court improperly limited the award to only principal,
ignoring the easily calculable interest and escrow amounts. In a typical foreclosure case,
the plaintiff "proves the amount of indebtedness through the testimony of a competent
witness who can authenticate the mortgagee's business records and confirm that they
accurately reflect the amount owed on the mortgage." Wolkoff v. Am. Home Mortg.
Servicing, Inc., 153 So. 3d 280, 281 (Fla. 2d DCA 2014). Furthermore, "[g]enerally, in a
foreclosure action, unpaid principal and interest are 'liquidated damages.'" Zumpf v.
Countrywide Home Loans, Inc., 43 So. 3d 764, 766 (Fla. 2d DCA 2010) (quoting Asian
Imports, Inc. v. Pepe, 633 So. 2d 551, 552 (Fla. 1st DCA 1994)). "Damages are liquidated
when the proper amount to be awarded can be determined with exactness from the cause
of action as pleaded, i.e., from a pleaded agreement between the parties, by an
arithmetical calculation or by application of definite rules of law." Asian Imports, Inc., 633
So. 2d at 552.
At trial, Nationstar's witness testified to the fixed interest rate—6.25%—and unpaid
principal—$340,795.31—necessary for determining the amount of interest due. The
payment history and note further support these figures. Nationstar also provided the trial
court with the figures necessary to determine the escrow amount. The witness specifically
addressed escrow amounts as follows:
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Q Were there any escrow advances also delineated in the
payment history?
A Yes.
Q And if you were to add them up, would they be -- would they
concur with the amounts that are due or being sought for in
the judgment?
A Yes.
Q And all those numbers come from the payment history?
A Yes.
Indeed, the payment history includes a column showing escrow disbursements, labeled
"ESCROW."
"Values awarded in a foreclosure judgment must be based on competent,
substantial evidence." Boyette v. BAC Home Loans Servicing, LP, 164 So. 3d 9, 10 (Fla.
2d DCA 2015). The witness's testimony, combined with the payment history and the note,
provided the trial court with competent, substantial evidence of the fixed interest rate and
escrow disbursements. Using this trial evidence, the trial court can easily calculate
Nationstar's interest and escrow amounts. See Salauddin v. Bank of Am., N.A., 150 So.
3d 1189, 1190 (Fla. 4th DCA 2014) ("Since the amount of interest from the time the
homeowner defaulted on the loan until May 1, 2012, was based on the starting fixed
interest rate (eight percent), the amount of interest owed for those months is supported
by the note and payment history."); cf. Michel v. Bank of N.Y. Mellon, 191 So. 3d 981,
983–84 (Fla. 2d DCA 2016) (reversing an award of interest where "[t]he bank did not
introduce records in support of the claimed interest or the actual amount contained in the
final judgment" and failed to demonstrate "what the applicable interest rate was from the
time of default or how much interest accrued from that point forward"). Thus, we remand
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for the trial court to modify the foreclosure judgment to include the interest and escrow
amounts.
LIEN SUPERIORITY
Nationstar argues the trial court improperly dismissed Seagrove as a superior
lienholder to Nationstar. We reverse the dismissal and remand for the trial court to
reinstate Seagrove as a party to this litigation. Because neither party presented
competent evidence to establish which one had a superior interest, "[o]n remand, either
party may request an evidentiary hearing to resolve this issue." See Hidden Ridge Condo.
Homeowners v. Greentree Servicing, LLC, 167 So. 3d 483 (Fla. 5th DCA 2015) (citing
Schroth v. Cape Coral Bank, 377 So. 2d 50 (Fla. 2d DCA 1979)).
AFFIRMED in Part; REVERSED in Part; and REMANDED with Instructions.
PALMER and LAMBERT, JJ., concur.
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