Third District Court of Appeal
State of Florida
Opinion filed November 17, 2021.
Not final until disposition of timely filed motion for rehearing.
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No. 3D19-1118
Lower Tribunal No. 16-32717
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JPMorgan Chase Bank, N.A.,
Appellant,
vs.
Jorge Llovet, et al.,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, David C.
Miller, Judge.
León Cosgrove, LLP, and Derek E. León, Andrew B. Boese, and John
R. Byrne, for appellant.
Jacobs Legal, PLLC, and Bruce Jacobs, for appellee Jorge Llovet.
Before EMAS, LOGUE, and HENDON, JJ.
LOGUE, J.
JPMorgan Chase Bank, N.A., a non-party to the litigation below, seeks
review of the denial of its motion for a protective order from post-judgment
discovery. For the reasons stated below, we reverse.
BACKGROUND
On September 7, 2005, Llovet borrowed $1,340,000 from Washington
Mutual Bank, FA, and signed both a note and mortgage. On or around April
1, 2012, Llovet stopped making payments.
On December 22, 2016, U.S. Bank N.A., successor Trustee to Bank of
America, N.A., successor in interest to LaSalle Bank N.A., on behalf of the
holders of the WaMu Mortgage Pass-Through Certificates, Series 2005-
AR15 (the “Plaintiff Trust”), filed a foreclosure action against Llovet. After
amendments, the operative July 20, 2017 complaint consisted of one
foreclosure count. Attached was a copy of the note with a signed, undated
indorsement reading: “Pay to the order of _____ Without Recourse
Washington Mutual Bank, FA by Cynthia Riley, Vice President.”1 Referring
to the attachment, the Plaintiff Trust alleged it was “the holder in possession
of the blank-endorsed original Note and Mortgage at the time this action was
commenced on December 22, 2016, and pursuant to section 673.3011,
1
Although either is acceptable, we use “indorsement” rather than
“endorsement” because that spelling is adopted by Florida’s Uniform
Commercial Code under Chapter 673 of the Florida Statutes.
2
Florida Statutes, is entitled to enforce the Note and Mortgage.” In the
operative August 10, 2017 amended answer, Llovet made a general denial
of all allegations in the complaint and raised lack of standing as an affirmative
defense.
After the case was placed on a trial calendar, the parties settled. Llovet
agreed to the entry of a consent judgment of foreclosure in return for the
Plaintiff Trust’s agreement to waive a deficiency judgment and to delay the
foreclosure sale. At a February 7, 2018 hearing, the trial court entered the
consent judgment and canceled the original note, which appears in the court
file. The consent final judgment set a sale date of May 8, 2018.
On April 5, 2018, Llovet filed a motion pursuant to Florida Rule of Civil
Procedure 1.540(b) to vacate the consent judgment for fraud. Llovet’s motion
to vacate raised the issue of standing that he had previously raised in his
answer. This time, however, he asserted that the Plaintiff Trust’s assertion
of standing was not simply incorrect but that it was fraudulent. Llovet’s claim
is based on the alleged fraud arising from the securitization of Llovet’s loan.
Llovet’s original lender was Washington Mutual Bank. In 2005, within
six months of Llovet signing the loan, Washington Mutual joined Llovet’s loan
with other loans making a $2.5-billion-dollar package for securitization and
sale to investors. As part of the transfer of the mortgages from Washington
3
Mutual to the Plaintiff Trust, the Pooling and Servicing Agreement required
Washington Mutual to indorse the mortgages either “(A) in blank, without
recourse, (B) to the Trustee, without recourse, or (C) to the Trust, without
recourse.”
Securitization also involved a contract to retain a loan servicer as agent
for the Trust. 2 Over the life of Llovet’s loan, there were three separate loan
servicers. When Washington Mutual securitized the loan, it continued to act
as loan servicer for the note and mortgage and as the agent for the Plaintiff
Trust. In the next decade, Washington Mutual developed financial troubles
and went into receivership with the Federal Deposit Insurance Corporation.
As receiver, the FDIC sold Washington Mutual’s banking operations to
Appellant, JPMorgan Chase Bank, N.A. The sale included “all mortgage
servicing rights and obligations of [Washington Mutual.].” JPMorgan Chase
thus became the second loan servicer. Subsequently, Select Portfolio
Servicing, Inc. took over the loan servicing. While the entity servicing the
2
Servicing the loan entails collecting the monthly payment and making
disbursements to the Plaintiff Trust, and paying applicable property taxes,
property insurance, and even foreclosing on the note. The servicer is entitled
to take its fees and costs out of the funds it collects. Servicing of loans can
be a profitable business separate and apart from lending. It is important to
keep in mind, however, that even when the loan servicer is enforcing the
note (including foreclosing), it is doing so only as the servicing agent—not
the owner—of the note. The legal owner remains the Trust.
4
loan changed, there is nothing in the record indicating that the Plaintiff Trust
ever transferred its legal ownership of the note.
As mentioned above, the original note of Llovet’s loan contains an
undated, blank indorsement signed by Cynthia Riley as Vice President of
Washington Mutual. In his motion to vacate under Rule 1.540, Llovet asserts
that Riley’s indorsement was fraudulent: “JP Morgan Chase affixed the
Cynthia Riley endorsement years after [Washington Mutual] ceased to exist
and Cynthia Riley lacked any authority to negotiate assets of [Washington
Mutual].” The motion has attached to it 278 pages of documents as exhibits.
Llovet served a subpoena duces tecum on JPMorgan Chase seeking
discovery to support his assertion that the Riley indorsement was
unauthorized. Among other things, Llovet sought “the complete chain of any
sale or purchase of . . . [the] loan” including screen shots of any images of
the notes and all communications, contracts, manuals, policies, and
procedures concerning the loan and other specified loans. JPMorgan Chase
filed a motion for protective order. The trial court limited the production to
documents and manuals relating to the subject loan, but otherwise denied
JPMorgan Chase’s motion. JPMorgan Chase timely sought review.
5
ANALYSIS
We have jurisdiction. 3 JPMorgan Chase argues that Llovet cannot re-
open a consent judgment to obtain discovery regarding matters that he knew
or should have known about and for which he could have sought discovery
before he entered into the consent judgment. In support, JPMorgan Chase
correctly notes that Llovet is trying to use Rule 1.540 as a vehicle to set aside
not only the consent judgment but also his written agreement to settle. This
aspect of the case “is of some importance because 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
3
We have held that an order compelling a non-party to produce discovery
“is, indeed, a final order as to [it].” United Servs. Auto. Ass’n v. Law Offs. of
Herssein & Herssein, P.A.,
233 So. 3d 1224, 1230 n.6 (Fla. 3d DCA 2017);
see also Varela v. OLA Condo. Ass’n,
279 So. 3d 266, 267 n.1 (Fla. 3d DCA
2019) (“We note that Varela properly sought review through a notice of
appeal rather than a petition for certiorari in this case because she is not a
party to the litigation below. The order on appeal ended all judicial labor in
the case as to Varela and constitutes a final appealable order.”); Fla. House
of Representatives v. Expedia, Inc.,
85 So. 3d 517, 520 (Fla. 1st DCA 2012)
(finding that an order compelling discovery by nonparties was final because
it “adjudicates the legal rights of nonparties and because it otherwise meets
the general test of finality”); Office of the Pub. Def. v. Lakicevic,
215 So. 3d
112 (Fla. 3d DCA 2017) (treating an order denying the public defender’s
motion for a protective order from a third-party subpoena duces tecum for
deposition as a final order reviewable on appeal, rather than via a petition for
writ of certiorari). Nevertheless, treating this matter as a petition for certiorari
would yield the same result. See Fla. R. App. P. 9.040(c).
6
the setting aside of a judgment pursuant to Rule 1.540.” Smiles v. Young,
271 So. 2d 798, 801 (Fla. 3d DCA 1973) (citations omitted).
In Smiles, we reversed the grant of a motion to vacate a consent
judgment under Rule 1.540 because the motion failed to state a ground for
relief when it merely identified information in the hands of the opposing party
that would have caused the complaining party to refuse to settle. This was
because the complaining party could have and failed to properly pursue the
information in discovery before entering into the consent judgment.
Id. In so
holding, we explained 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.”
Id. 802–03. “Nor does
the rule allow a party to avoid the consequences of a decision to settle
litigation even if the party regards the settlement as ‘bad’ in retrospect.”
Id.
We have recently reiterated the holding of Smiles in the foreclosure
context in Bank of New York Mellon v. Simpson,
227 So. 3d 669, 671 (Fla.
3d DCA 2017). Using the standard set forth in Smiles, we reversed a grant
of a motion to vacate a consent final judgment of foreclosure because the
allegations “were known and could have been discovered by due diligence
at the time the foreclosure suit” was pending. We concluded that “Rule
1.540(b) does not have as its purpose or intent the reopening of lawsuits to
7
allow parties to state new claims or offer new evidence omitted by oversight
or inadvertence.” Id. at 670.
Applying this law to the instant case, we agree with JPMorgan Chase
that Llovet is barred from re-opening discovery post-judgment because the
discovery he now seeks could have been requested pre-judgment. Llovet
was obviously aware of the standing issue before he consented to the final
judgment because he raised lack of standing as an affirmative defense in his
answer. The arguments and materials Llovet offered in support of his Rule
1.540 motion predate the 2018 consent final judgment and include:
• Deposition of Cynthia Riley, JPMorgan Chase Bank, N.A. v.
Orozco, No. 2009-29997-CA (Fla. 11th Cir. Ct. Jan. 15, 2013);4
• Consent Order, U.S. Dep’t of the Treasury, Comptroller of the
Currency, In re JPMorgan Chase Bank, N.A., AA-EC-11-15,
2011 WL 6941542 (April 13, 2011);5 and
4
Riley, a Washington Mutual official, testified that Llovet’s indorsement was
done properly and timely, albeit on a mass basis. See § 673.4011(2)(a),
Florida Statutes (“A signature may be made . . . [m]anually or by means of a
device or machine.”). Although filed by Llovet, this document undercuts his
claim. In any event, this deposition predates the consent judgment.
5
JPMorgan Chase agreed to not litigate future foreclosure proceedings
without ensuring the proper indorsement of notes. But JPMorgan Chase
expressly did not admit “any wrongdoing.” JPMorgan Chase’s commitment
in this regard without any admission falls far short of indicating that Riley’s
indorsement on Llovet’s loan was fraudulent. See Simpson, 227 So. 3d at
671 (holding fraud cannot be established by “generalized complaints about
the mortgage banking industry” that “have no specific relation to the facts of
this case”). In any event, this document also predates the consent judgment.
8
• Order Granting Final Judgment to Defendant, Wells Fargo Bank,
N.A. v. Riley, No. 2016-010759-CA (Fla. 15th Cir. Ct. Dec. 12,
2017). 6
Llovet makes no attempt to explain why due diligence would not have
provided him these materials and arguments prior to his agreement to the
consent judgment.
CONCLUSION
“[L]itigation must, at some point, come to an end.” Witt v. State,
387
So. 2d 922, 925 (Fla. 1980). The right to conduct discovery post-judgment is
much more limited than the right to conduct discovery pre-judgment. Here,
the trial court committed reversible error in allowing Llovet to re-open a final
judgment to obtain discovery regarding matters that Llovet could have,
through the exercise of due diligence, obtained prior to entry of the final
consent judgment. Allowing such discovery amounts to licensing an
impermissible “fishing expedition[] in post-judgment proceedings.” Rooney
v. Wells Fargo Bank, N.A.,
102 So. 3d 734, 736 (Fla. 3d DCA 2012).
Reversed.
6
This case involved different parties, a different note, mortgage, trial court,
record, and even different legal issues. More importantly, it conflicts with
cases like HSBC Bank USA, Nat’l Ass’n v. Buset,
241 So. 3d 882, 885 (Fla.
3d DCA 2018). In any event, this too predates the consent judgment.
9
