Bank of New York Mellon v. Simpson , 227 So. 3d 669 ( 2017 )

Third District Court of Appeal
State of Florida
Opinion filed August 9, 2017.
Not final until disposition of timely filed motion for rehearing.
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No. 3D16-2445
Lower Tribunal No. 11-32903
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The Bank of New York Mellon, etc.,
Appellant,
vs.
Keith A. Simpson,
Appellee.
An appeal from a non-final order from the Circuit Court for Miami-Dade
County, Eric William Hendon, Judge.
Lapin & Leichtling, LLP and Adam B. Leichtling and Anne Janet
Hernandez Anderson, for appellant.
Jacobs Keeley, PLLC and Bruce Jacobs and Court Keeley, for appellee.
Before SUAREZ, EMAS, and LOGUE, JJ.
SUAREZ, J.
The Bank of New York Mellon [“BNYM”] appeals from the lower court’s
order vacating the December 6, 2013 Consent Final Judgment of Foreclosure, as
well as the Settlement and Release Agreement between BNYM and homeowner
Keith A. Simpson [“Simpson”]. We reverse and remand for reinstatement of the
Final Judgment.
Simpson defaulted on his mortgage in 2011. In 2013 the parties entered into
a Settlement and Release Agreement [SRA] by which the Simpsons agreed to enter
into a Consent Final Judgment in exchange for an extended foreclosure sale date
and BNYM’s waiver of its right to seek a deficiency judgment. The SRA included
a full release of BNYM from any and all claims that could be asserted in the
foreclosure action. The SRA required any modifications or amendments to be
made within 30 days; none were.
At the time that BNYM and Simpson entered into the SRA, the foreclosure
trial was imminent, and Simpson’s attorney at the time, Ms. Barrow, was
attempting to renegotiate the loan with the Bank. The record clearly shows that
Attorney Barrow advised Simpson that he would not prevail at the foreclosure trial,
and that a reasonable legal strategy would be to “buy time” in between the final
judgment and foreclosure sale date in order to negotiate new loan terms. Simpson
entered into the Settlement and Release with the Bank, secured a delayed sale date
and in return the Bank agreed it would not seek a deficiency judgment against him.
The court rendered Final Consent Judgment in foreclosure.
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Simpson subsequently sought to delay the sale date, to vacate the sale, then
after many motions and a new attorney (his current attorney, Bruce Jacobs), sought
to challenge the SRA and Final Consent Judgment via rule 1.540(b) for mistake,
inadvertence or fraud. Simpson’s counsel now alleges that, at the time Simpson
entered into the mortgage and note with BNYM, there was ongoing fraud
committed by other banks; if he could have engaged in discovery during the
foreclosure, he argued, he could have provided evidence of this.1 After hearing
argument from both parties at the September 26, 2016 evidentiary hearing, the trial
court agreed with Simpson’s counsel that the general allegations of fraud in the
mortgage banking industry warranted vacating the SRA and Final Consent
Judgment in this case, putting the parties back into their pre-foreclosure status.
This appeal ensued.
The standard of review of a 9.130(a)(5) appeal of a motion filed under
Florida Rule of Civil Procedure 1.540(b) is usually abuse of discretion. However,
The principles of law to be applied in an action to set aside a contract
for unilateral mistake or fraud are more stringent than the standards
that have so far been established for the setting aside of a judgment
pursuant to Rule 1.540, when the judgment entered pursuant to that
rule is not based on a settlement.
Smiles v. Young, 271 So. 2d 798, 801 (Fla. 3d DCA), cert. denied, 279 So. 2d 305
(Fla. 1973). The record in the case before us shows that Simpson entered into the
1 Mr. Jacobs was not Simpson’s attorney during the foreclosure proceedings.
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valid SRA with BNYM well before Simpson’s current counsel Jacobs was hired.
Simpson argues on appeal that the SRA and Final Consent Judgment should be
vacated because, if Simpson had known before he entered into the SRA about his
current counsel’s “investigations” into the general mortgage banking industry, he
would never have signed it, but hired Jacobs instead. The generalized allegations
of fraudulent practices in the mortgage industry now asserted by Simpson in his
Rule 1.540 motion and here on appeal were known and could have been
discovered by due diligence at the time the foreclosure suit was pending between
2011 and 2013. This Court has held to the principle that that Rule 1.540(b) does
not have as its purpose or intent the reopening of lawsuits to allow parties to state
new claims or offer new evidence omitted by oversight or inadvertence. See
Miami Nat. Bank v. Sobel, 198 So. 2d 841, 842 (Fla. 3d DCA 1967).
Furthermore, at the Rule 1.540 hearing Simpson’s counsel did not set forth
any “clear and convincing” evidence that BNYM committed fraud in the
underlying mortgage and note documents – there is no evidence in the record that
this mortgage and note were fraudulently rendered, or that the assignments were
manufactured or robo-signed. E.g., McGill v. Boulevard & Bay Land &
Development Co., 130 So. 460 (1930) (“Where fraud is asserted as a defense or
ground for relief against a mortgage, the burden of proving it is upon the party
asserting the same, and the proof thereof must be clear and convincing. . . .”).
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Merely invoking current counsel’s “investigations” into certain alleged fraudulent
practices of the mortgage banking industry at that time does not meet the legal
standards for evidence of fraud in this case. The record contains no specific
allegations or any factual evidence that BNYM committed any fraud with regard to
Simpson’s mortgage. Additionally, Simpson did not present any evidence of
duress in entering into the SRA. To establish duress, he must prove that the SRA
was effected involuntarily and was not an exercise of free will, and that this
condition of mind was caused by improper or coercive conduct by the other party.
See City of Miami v. Kory, 394 So. 2d 494 (Fla. 3d DCA 1981). Simpson did not
prove either element of duress. To the contrary, testimony from Simpson and his
then-attorney Ms. Barrow shows that Simpson’s decision to enter into the SRA and
Consent Final Judgment was a tactical litigation strategy to buy more time for an
extended sale date in order to seek a loan modification.2 Simpson did not argue
2 The record shows that Simpson’s initial counsel in the foreclosure, Ms. Barrow,
represented her client competently, filed all necessary documents and pleadings,
asserted valid defenses to foreclosure, and negotiated effectively for her client
given his circumstances at the time. Simpson now argues that Barrow failed to
plead fraud or mistake in the foreclosure proceedings. Failure to plead available
defenses, however, is not a basis for relief from a judgment or decree under Rule
1.540(b). Attorney Barrow did plead lack of standing by challenging the
assignments. Furthermore, discovery was ongoing when Simpson made the
decision to end the litigation by settling. There is no record showing of ineffective
or incompetent representation as Simpson’s current attorney Jacobs suggests of
Ms. Barrow on appeal. Simpson was competently represented by counsel, had full
access to discovery (in fact, the record reveals that he made full use of his
discovery rights up until deciding to enter into the SRA), and he had every right to
reject the settlement offer until he could adequately explore his defenses.
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that the SRA is ambiguous or unclear, and he did not ask to set the SRA aside. He
did not file any affidavits; he has not preserved any argument regarding the SRA’s
validity or interpretation.
Simpson’s motion to vacate the Final Judgment was based on allegations
made by his current attorney that have no specific relation to the facts of this case,
during a time when Simpson was not represented by that attorney, and are merely
generalized complaints about the mortgage banking industry. The SRA was
entered into by Simpson with full knowledge, and the releases therein are valid and
effective to bar the claims he raised in the Motion to Vacate, including those
generalized references to an “investigation of the mortgage banking industry” in
which his current counsel is engaged. The issues Simpson now raises are not
valid bases under Rule 1.540 to relieve him from the Consent Final Judgment or
from his agreements in the SRA. He cannot use the rule to allow him to avoid the
consequences of his decision to settle litigation, even if he regards it as a “bad”
settlement in retrospect.
We therefore reverse the order on appeal and instruct the trial court on
remand to deny Simpson’s amended Motion to Vacate Final Judgment, direct the
court to reinstate the SRA and Final Consent Judgment in foreclosure and grant
BNYM’s Amended Motion to Enforce Order enforcing the parties’ Settlement
Agreement and General Release of Claims.
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