Esperanza Robelto and Yonis Robelto v. U.S. Bank Trust, N.A. ( 2016 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ESPERANZA ROBELTO and YONIS ROBELTO,
Appellants,
v.
U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF8 MASTER
PARTICIPATION TRUST,
Appellee.
No. 4D14-4721
[May 4, 2016]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; John Bowman, Judge; L.T. Case No. CACE08-007543.
Mauricio Garcia of Law Offices of Mauricio Garcia, P.A., Sunrise, for
appellants.
Heidi J. Bassett and Robert R. Edwards of Robertson, Anschutz &
Schneid, P.L., Boca Raton, for appellee.
WARNER, J.
Homeowners challenge the trial court’s final judgment of foreclosure,
contending that the appellee failed to prove the necessary elements to
reestablish a lost note. The evidence proved that the note was last in
possession of Wells Fargo, but the appellee did not establish Wells Fargo’s
possession or, if it had possession, its connection to the appellee or its
predecessors in title. We agree the appellee did not establish the
requirements to reestablish the lost note and reverse.
HSBC Mortgage Services filed a mortgage foreclosure proceeding
against Homeowners in 2008 based upon the homeowners’ default on the
promissory note. Attached to the complaint were exhibits, including a
copy of the mortgage showing Delta Funding Corporation as the lender
and a promissory note with a blank endorsement from Delta Funding. The
complaint alleged that HSBC owned the note. Five years after filing the
complaint, HSBC moved to amend to include a count for reestablishment
of the note pursuant to section 673.3091, Florida Statutes (2008). It
attached a lost note affidavit in which the affiant, a representative of
HSBC, testified that HSBC was in possession of the note prior to it
becoming lost. In March 2014, HSBC withdrew its motion for leave to
amend, and ultimately the case proceeded to trial, at which the court
declared a mistrial when the note was not produced.
Later, U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation
Trust, was substituted as the party plaintiff in place of HSBC. U.S. Bank
filed a Verified Second Amended Complaint for Foreclosure and included
a count to reestablish a lost note. The same copy of the note as attached
to the original complaint was attached to the amended complaint.
Homeowners answered, raising affirmative defenses, and the case was
reset for trial.
At trial, a representative from Caliber Home Loans was the only witness
to testify. She testified that Caliber was the current loan servicer for the
appellee, U.S. Bank. The representative testified that as a default service
officer, her responsibility was to “research historical business records and
documents pertaining to loans that are currently in litigation.” She
explained the boarding process for the loan. She then testified regarding
the lost note, reading from the “Affidavit of Lost Note” over Homeowners’
objection that she lacked personal knowledge. She did not testify that she
searched for the lost note; instead she explained that the affidavit
“indicat[ed]” that the files of Wells Fargo had been searched, and the note
was not found. The affidavit indicated that Wells Fargo was the usual
place of storage of the note, although there was no testimony as to why it
would be held there. Referring to the affidavit, the representative testified
that the note was lost while in possession of Wells Fargo, prior to Caliber
taking over the servicing of the loan. There was no testimony as to the
relationship between Wells Fargo and any other entity involved in this
case, including HSBC. The Caliber representative did not expressly testify
that Wells Fargo was a servicer of the loan. She said that the affidavit
indicated that Wells Fargo was a prior servicer, even though the affidavit
did not state that Wells Fargo was a servicer. Later, she testified that
HSBC and Caliber were the only servicers of the loan.
The representative was asked whether she knew that the prior servicer
(without identifying who the servicer was) had possession of the note when
suit was filed in 2008. At first she said she did not, and then responded,
“I believe they did.” (Emphasis supplied). She was then asked, “What do
you base that on?” She responded, “The filing of the complaint. . . . The
fact that they were able to file the complaint would indicate that they were
the holder of the note.” The defense objected to this testimony, because
the witness was not testifying to something within her knowledge. The
court overruled the objection.
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Through the representative, two copies of the lost note were introduced.
The first, filed with the original complaint, had a blank endorsement from
Delta Funding, the original lender. The second, attached to the affidavit
of lost note, had two allonges, the first of which showed a transfer of the
loan from HSBC to U.S. Bank, as trustee. A representative of Caliber
Home Loans signed as attorney-in-fact for HSBC. The second allonge was
endorsed in blank from U.S. Bank and also signed by a representative of
Caliber Home Loans as attorney-in-fact for U.S. Bank. Both of the allonges
had Caliber document numbers on them and were signed by Caliber
officers. Thus, these allonges could not have been created prior to Caliber
becoming servicer for the loan and thus must have been created after the
note was lost.
Although the Bank’s counsel stated that he was not attempting to admit
the affidavit of lost note, it was attached as Plaintiff’s Exhibit 1. The
affidavit states, “The Plaintiff acquired ownership of the Original note from
Household Finance, Inc., as indicated from the attached business
records.” The only records attached were the note and the allonges
described above, none of which mention Household Finance.
The representative also referred to a document which she said was part
of the business records at the time Caliber took over servicing of the loan.
Exhibit 3 is a “waybill,” with an HSBC logo and address on it, to the
attention of Marshall Watson, whose law firm filed the original complaint.
It states that “enclosed for the following accounts . . . are notes and
mortgages.” Four of the account numbers for files are printed on the
waybill, but the account number for the file of the homeowners in this case
was handwritten. The waybill had a printed date prior to the filing of suit
in this case. No other testimony was presented as to when the handwritten
entry on the waybill was entered or who entered it. Being a representative
of Caliber which only acquired the servicing of the loan in 2013, the
witness had no knowledge of any of the entries on the document.
After admitting payment histories and other documents, U.S. Bank
rested, and Homeowners moved for involuntary dismissal for failure to
prove either the reestablishment of the lost note or standing of HSBC at
the initial filing of the complaint. The court denied the motion and
ultimately entered a judgment reestablishing the note and foreclosing on
the mortgage. This appeal followed.
“A finding that a lost note is reestablished under 673.3091, Florida
Statutes is reversible upon the appellate court determination of a failure
of proof.” Seidler v. Wells Fargo Bank, N.A., 179 So. 3d 416, 417 (Fla. 1st
DCA 2015). We review the denial of a motion for involuntary dismissal de
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novo. Ensler v. Aurora Loan Servs., LLC, 178 So. 3d 95, 97 (Fla. 4th DCA
2015).
Section 673.3091, Florida Statutes, establishes the requirements to
enforce a lost note:
A person not in possession of an instrument is entitled to
enforce the instrument if:
(a) The person seeking to enforce the instrument was entitled
to enforce the instrument when loss of possession occurred,
or has directly or indirectly acquired ownership of the
instrument from a person who was entitled to enforce the
instrument when loss of possession occurred;
(b) The loss of possession was not the result of a transfer by
the person or a lawful seizure; and
(c) The person cannot reasonably obtain possession of the
instrument because the instrument was destroyed, its
whereabouts cannot be determined, or it is in the wrongful
possession of an unknown person or a person that cannot be
found or is not amenable to service of process.
§ 673.3091(1), Fla. Stat. (2008). In addition, the person seeking to enforce
the note must prove the terms of the note and provide security to the
obligor in the event some other person seeks to enforce the note.
§ 673.3091(2), Fla. Stat.
U.S. Bank’s case completely fails on the first requirement. It did not
prove that it had acquired the note from a person entitled to enforce the
note when loss of possession occurred. A person entitled to enforce the
note is: (1) The holder of the instrument; (2) A nonholder in possession of
the instrument who has the rights of a holder. § 673.3011, Fla. Stat.
(2008). The representative testified that Wells Fargo was in possession of
the note when loss of possession occurred. No evidence explained how
Wells Fargo had acquired possession of the note or whether it was a holder
or a non-holder with rights of a holder. If Wells Fargo was a servicer, no
testimony explained for whom Wells Fargo was servicing the loan.1
1 The answer brief states that the representative testified that Wells Fargo had
serviced the loan for HSBC since its inception. The citation to the record shows
that this is a misstatement. The record shows that she testified that HSBC was
the servicer of the loan from its inception.
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The representative stated that the “prior loan servicer” had possession
of the note when the case was filed, but she only “believed” that because
the complaint was filed. She had no personal knowledge of this, and thus
her testimony is solely based upon any business records which might show
possession. The waybill showed not that Wells Fargo was in possession,
but that HSBC was in possession and transferred it to its attorney, not
Wells Fargo.
Because there was no proof of the connection between HSBC and Wells
Fargo, there is no evidence of who was entitled to enforce the note at the
time possession was lost.2 If HSBC owned and possessed the note at the
time it filed suit, there is no explanation of how Wells Fargo acquired the
note. Admitted in evidence was a copy of an allonge, obviously created
after Caliber began servicing the loan,3 purporting to transfer the now-lost
note from HSBC to U.S. Bank, but there is no reference to Wells Fargo on
either allonge.
Moreover, even if we were to suppose that Wells Fargo somehow was a
servicer and in the chain of title, the evidence is insufficient to show the
chain of transfers through the two allonges. They purport to show first a
transfer from HSBC to U.S. Bank and then a blank endorsement from U.S.
Bank. However, both are signed by a representative of Caliber, and there
is nothing in the record to show by what authority Caliber could make
either assignment. At best, it might be inferred that Caliber was the
servicer for U.S. Bank. But no servicing agreements were entered to show
that Caliber had authority from HSBC to act as its attorney-in-fact to
assign the loan to U.S. Bank. There is simply no competent evidence to
2 The amended complaint to reestablish a lost note filed by HSBC alleged that it
was in possession of the note when it was lost, thus contradicting the
representative’s testimony at trial.
3 Although not argued by the appellant, these do not appear to meet the definition
of an allonge, which is “a piece of paper annexed to a negotiable instrument or
promissory note, on which to write endorsements for which there is no room on
the instrument itself. Such must be so firmly affixed thereto as to become a part
thereof.” See Booker v. Sarasota, Inc., 707 So. 2d 886, 887 n.1 (Fla. 1st DCA
1998) (quoting Black’s Law Dictionary 76 (6th ed. 1990)). These could not have
been attached to the note if the note was lost before Caliber began servicing the
loan. This is not to say, however, that the loan could never be assigned so as to
prevent a defendant from receiving a windfall in a foreclosure case. See Slizyk v.
Smilak, 825 So. 2d 428 (Fla. 4th DCA 2002). However, here, unlike the facts in
Slizyk, the person in possession of the note when lost, i.e. Wells Fargo, never
assigned the notes, and the allonge executed by Caliber could not be considered
a valid assignment.
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support a finding that U.S. Bank acquired the note from a person who had
the right to enforce it when the note was lost.
The representative’s testimony was woefully inadequate to prove whose
possession the note was in when it was lost, and whether that person or
entity was a holder or had the rights of a holder. The representative
contradicted herself and the documents by which she attempted to prove
the elements of possession and authority. She obviously had no
knowledge of what had happened to the note because she simply read from
the affidavit of lost note.
Because U.S. Bank failed to prove all the elements of the cause of
action, the court erred in entering judgment for it to reestablish the lost
note. Without that, the foreclosure could not be granted. See Guerrero v.
Chase Home Fin., LLC, 83 So. 3d 970 (Fla. 3d DCA 2012). We do not
reverse for further proceedings, as the court did in Guerrero, because here
U.S. Bank had pled to reestablish the note and simply failed in its proof.
It is not entitled to a second bite at the apple. We thus reverse for entry of
judgment for the homeowners.
CIKLIN, C.J., and KLINGENSMITH, J., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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