Ronald Losner v. HSBC Bank, USA, N.A. , 2016 Fla. App. LEXIS 5300 ( 2016 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
RONALD LOSNER,
Appellant,
v.
HSBC BANK USA, N.A., AS TRUSTEE FOR DEUTSCHE ALT-A
SECURITIES MORTGAGE LOAN TRUST, SERIES 2007-1, MORTGAGE
PASS-THROUGH CERTIFICATES,
Appellee.
No. 4D15-493
[April 6, 2016]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; William R. Slaughter II, Senior Judge; L.T. Case No.
2013CA004876 (AW).
Brian Korte and Scott Wortman of Korte & Wortman, P.A., West Palm
Beach, for appellant.
No appearance for appellee.
FORST, J.
Appellant Ronald Losner (“Homeowner”) appeals the entry of a final
judgment of foreclosure in favor of HSBC Bank, USA, N.A., as trustee for
Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-1, Mortgage
Pass-Through Certificates (“the Bank”). His arguments on appeal are that
the Bank failed to prove either that it had standing to foreclose or that a
mutual mistake had been made which would serve as grounds for
reforming the mortgage. We affirm on the standing issue without further
discussion. We reverse on the reformation issue and remand for entry of
a money judgment in lieu of a judgment requiring the sale of the property.
Background
In 2006, Homeowner took out a note and mortgage on a property with
“Approved Funding Corp., NY Corporation” as the lender. The mortgage
had a section where a legal description of the property was to be affixed,
but no such description was actually part of the mortgage. The mortgage
was assigned from MERS, the mortgagee (as opposed to Approved Funding
Corp., the lender), to the Bank in September of 2009. That assignment
contained a legal description of the property.
In March of 2013, the Bank filed a complaint to foreclose on the
mortgage alleging three counts: the foreclosure itself, a lost note count,
and a count to reform the mortgage to include the legal description of the
property. The copy of the note attached to the complaint contained an
undated blank indorsement made by Approved Funding Corp. Also
attached to the complaint was an affidavit of lost note.
Before trial, the Bank moved to transfer the original loan documents
from a separate case to this one. The documents had been filed with the
court on May 5, 2010, and the Bank’s motion to transfer them was granted
on January 14, 2015.
After a bench trial, the court found that the Bank was entitled to
foreclose as the party with standing and that the reformation count should
be granted.
Analysis
In a reformation case, the lower court’s findings of fact “are entitled to
a presumption of correctness.” Providence Square Ass’n v. Biancardi, 507
So. 2d 1366, 1372 (Fla. 1987) (per curiam). Such findings are reviewed
for clear error and sufficient evidence. Id.
The purpose of reformation is to “allow[] [a] defective agreement to be
corrected to reflect the true terms of the agreement the parties actually
reached.” Circle Mortg. Corp. v. Kline, 645 So. 2d 75, 78 (Fla. 4th DCA
1994). The key to a reformation is the showing of a mutual mistake by
clear and convincing evidence. Id. at 77; Allstate Ins. Co. v. Vanater, 297
So. 2d 293, 296 (Fla. 1974).
Here, the Bank introduced clear and convincing evidence to show that
a mistake was made, but not to show what the actual agreement between
the originally contracting parties was. The mortgage that was introduced
contained a large blank area with the words “Please attach legal
description.” No legal description was attached. Under no reasonable
interpretation of the mortgage could a person believe that it was the intent
of the parties to leave that section blank. Clearly, therefore, a mutual
mistake was made.
But, as noted, the purpose of reformation is not merely to show that a
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mistake has been made, but to correct that mistake to reflect the terms
actually agreed upon. It is here that the Bank has failed to introduce clear
and convincing evidence.
The Bank’s only evidence as to what should have been in the blank area
is in an assignment of mortgage from the original mortgagee to the Bank.
That assignment contained a legal description that, via testimony, was
established to be the property at issue. But this does not establish that,
at the time the mortgage was executed, both parties to the mortgage
intended that description to be the one included. In fact, it does not even
establish that the original mortgagee intended that description, let alone
that Homeowner ever intended as much.
In short, the Bank failed to establish what exactly the original
intentions of the contracting parties were. The trial court therefore erred
in reforming the mortgage.
Conclusion
We affirm the lower court’s judgment with respect to the Bank’s
standing to foreclose. However, the Bank failed to establish the intent of
the original parties to the mortgage, even though it did establish that there
was a mutual mistake. This failure compels us to reverse the final
judgment to the extent that it grants the Bank’s reformation count, and to
remand for a new final judgment to be issued without such reformation.
Homeowner conceded in the trial court that if the Bank is entitled to
judgment in its favor on the foreclosure, a determination we do not disturb,
that Homeowner would be liable for a monetary judgment.
In sum, we therefore affirm the Bank’s standing to foreclose; reverse
and remand with instructions to enter an involuntary dismissal of the
Bank’s reformation count; and instruct the trial court to modify the final
judgment to grant the Bank only a monetary judgment for Homeowner’s
failure to make payments on the note.
Affirmed in part; reversed in part; and remanded for further proceedings.
STEVENSON and MAY, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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