Deutsche Bank Trust Company Americas, Etc. v. Beauvais , 188 So. 3d 938 ( 2016 )

Third District Court of Appeal
State of Florida
Opinion filed April 13, 2016.
________________
No. 3D14-575
Lower Tribunal No. 12-49315
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Deutsche Bank Trust Company Americas, as Indenture Trustee for
American Home Mortgage Investment Trust 2006-2,
Appellant,
vs.
Harry Beauvais, and Aqua Master Association, Inc., a non-profit
Florida corporation,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Peter R. Lopez,
Judge.
K&L Gates, and David R. Fine (Harrisburg, PA) and William P.
McCaughan, Steven R. Weinstein and Stephanie N. Moot, for appellant.
Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel and Steven
M. Siegfried and Nicholas D. Siegfried; Wallen Hernandez Lee Martinez, and
Todd L. Wallen, for appellee, Aqua Master Association, Inc.
Ausley McMullen and Major B. Harding; Hargrove Law Group and John R.
Hargrove, for Baywinds Community Association, Inc., as amicus curiae.
Levine Kellogg Lehman Schneider + Grossman, and Stephanie Reed
Traband and Victor Petrescu, for the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation, as amici curiae.
Morgan, Lewis & Bockius, and Robert M. Brochin, Joshua C. Prever and
Christopher K. Smith, for Mortgage Bankers Association of South Florida, as
amicus curiae.
Matthew Estevez, for Community Associations Institute, as amicus
curiae.
Jacksonville Area Legal Aid and Lynn Drysdale, for the National
Association of Consumer Advocates, the National Consumer Law Center and the
Jerome N. Frank Legal Services Organization at the Yale Law School, as amici
curiae.
Gilbert Garcia Group, Michelle G. Gilbert, Jennifer Lima-Smith and
Nicholas R. Cavallaro; Gladstone Law Group, Andrea R. Tromberg and Jason F.
Joseph; Robertson, Anschutz & Schneid, Robert R. Edwards and Jessica P.
Quiggle; Kass Shuler, Melissa A. Giasi and Richard S. McIver; Elizabeth R.
Wellborn; Brock and Scott, Shaib Y. Rios and Curtis J. Herbert, for the American
Legal and Financial Network, as amicus curiae.
McGlinchey Stafford, and Manuel Farach, for the Business Law Section
of the Florida Bar, as amicus curiae.
Goldman Felcoski & Stone, and Robert W. Goldman; Gunster, and
Kenneth B. Bell and John W. Little, III, for the Real Property Probate & Trust Law
Section of The Florida Bar, as amicus curiae.
Crabtree & Auslander, and John G. Crabtree, Charles Auslander, George
R. Baise, Jr., and Brian C. Tackenberg; Alice Vickers and Bryant H. Dunivan, Jr.,
for Florida Alliance for Consumer Protection, as amicus curiae.
Before SUAREZ, C.J., and WELLS, SHEPHERD, ROTHENBERG, LAGOA,
SALTER, EMAS, FERNANDEZ, LOGUE and SCALES, JJ.
ON MOTION FOR REHEARING EN BANC OR, IN THE
ALTERNATIVE, MOTION FOR CERTIFICATION
2
WELLS, Judge.
We grant rehearing en banc, withdraw our prior opinion in Deutsche Bank
Trust Co. America v. Beauvais, 40 Fla. L. Weekly D1 (Fla. 3d DCA Dec. 17,
2014), and substitute this opinion in its stead.
Deutsche Bank appeals from a final summary judgment denying foreclosure
of a mortgage securing a $1,440,000 promissory note executed in the bank’s favor
by borrower Harry Beauvais. The complaint filed by the bank on December 18,
2012, alleged entitlement to relief by virtue of Beauvais’ failure to pay an
installment payment due on October 1, 2006, “and all subsequent payments.” The
complaint, in addition to naming Beauvais, joined a number of entities with
potential interests in the property securing the bank’s loan including the Aqua
Master Association, Inc., the condominium association for the premises at issue.
By the time this action was commenced, Beauvais no longer held title to the
condominium securing payment of this loan, his interest having been foreclosed
and title transferred in 2011 to Aqua to satisfy outstanding condominium
assessments. Beauvais, with no interest in the property, filed no answer to the
bank’s complaint and asserted no defenses to foreclosure of the bank’s loan. The
bank moved for a default; however, none appears to have been entered. Aqua, on
the other hand, now title holder of the property securing the bank’s loan, filed an
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answer and affirmative defenses in which it alleged that the instant action was
barred by the five year statute of limitations governing mortgage foreclosures. See
§ 95.11(2)(c), Fla. Stat. (2013). According to Aqua, the bank’s cause of action for
foreclosure accrued in 2007 when the bank’s predecessor in interest accelerated the
balance due on the loan by filing a prior suit to collect on a September 1, 2006
default,1 and because the bank failed to pursue foreclosure within five years of that
acceleration/accrual after the first suit was dismissed, the instant action was time
barred.
The trial court agreed and granted judgment in Aqua’s favor:
The previous mortgage holder filed suit against borrower
[Beauvais] and the Association on January 23, 2007, alleg[ing] that
the borrower defaulted on the mortgage and elected to accelerate
payment of the balance due on the note and mortgage. The prior
complaint specifically declared the full amount payable under the note
and mortgage, $1,439,976.80, to be due. However, the action was
dismissed without prejudice on plaintiff’s non-appearance at initial
case management conference on December 6, 2010. On December
12, 2012, Plaintiff filed the instant suit to foreclose the mortgage. The
complaint called for the entire balance of $1,439,976.80, to be due.
Association is correct that the filing of the prior lawsuit in 2007
triggered the running of the statute of limitations with respect to the
entire balance of the mortgage and note. The case to which the
Plaintiff cites, Singleton v. Greymar Assoc., 882 So. 2d 1004 (Fla.
2004), is inapposite and concerns only the application of res judicata
in an action to collect discrete payments under an installment contract.
Singleton is not only distinguishable from the facts of the instant case,
1American Home Mortgage Servicing, Inc. v. Harry Beauvais et. al., Case No 07-
02054 CA 10.
4
it is wholly irrelevant to the issue of the statute of limitations raised by
the Association.
It is the determination of this Court that the right to accelerate
was exercised by the filing of the prior lawsuit on January 23, 2007.
Since more than five years elapsed between the acceleration and the
filing of the underlying suit, the action is barred by the statute of
limitations. See § 95.11(2)(c), Fla. Stat. . . .
The bank appeals. We reverse because we, like our sister courts, find the
Florida Supreme Court’s decision in Singleton v. Greymar Associates, 882 So. 2d
1004 (Fla. 2004), applicable to the instant action, and that it mandates reversal.
See Evergrene Partners, Inc. v. Citibank, N.A., 143 So. 3d 954, 956 (Fla. 4th DCA
2014) (applying Singleton and concluding that the statute of limitations would not
bar foreclosure of an accelerated loan where an earlier, voluntarily dismissed,
foreclosure had been brought to enforce the same loan accelerated for a separate
default); see also Nationstar Mortg., LLC v. Brown, 175 So. 3d 833, 834-35 (Fla.
1st DCA 2015) (applying Singleton to hold that the statute of limitations did not
bar an action to foreclose an accelerated loan brought more than five years after a
prior action to foreclose on the same accelerated loan had been brought but then
voluntarily dismissed without prejudice); accord Hicks v. Wells Fargo Bank, N.A.,
178 So. 3d 957, 959 (Fla. 5th DCA 2015) (citing Singleton and concluding “we
reject Homeowners’ implication in their brief that Bank is now forever barred from
bringing an action to foreclose. Despite the previous acceleration of the balance
owed in both the instant suit and prior suit, Bank is not precluded from filing a new
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foreclosure action based on different acts or dates of default not previously alleged,
provided that the subsequent foreclosure action on the subsequent defaults is
brought within the statute of limitations period found in section 95.11(2)(c),
Florida Statutes”).
1. Application of Singleton to the instant case.
a. Singleton allows for multiple actions for individual defaults with accompanying
accelerations.
In Singleton, the Florida Supreme Court held that “successive foreclosure
suits, regardless of whether or not the mortgagee sought to accelerate payments on
the note in the first suit,” were not barred if, as here, the second suit was predicated
on a new default because a “subsequent and separate alleged default create[s] a
new default and independent right in the mortgagee to accelerate payment on the
note in a subsequent foreclosure action.” Singleton, 882 So. 2d at 1008 (emphasis
added); see, e.g., PNC Bank, NA v. Neal, 147 So. 3d 32, 32 (Fla. 1st DCA 2013)
(stating that “the dismissal with prejudice of PNC Bank’s foreclosure action . . .
does not preclude PNC Bank from instituting a new foreclosure action based on a
different act or a new date of default not alleged in the dismissed action”); Star
Funding Solutions, LLC v. Krondes, 101 So. 3d 403, 403 (Fla. 4th DCA 2012)
(citing Singleton as support for the conclusion that dismissal with prejudice of the
instant action would have no impact on a subsequent foreclosure action because
“[a] new default, based on a different act or date of default not alleged in the
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dismissed action, creates a new cause of action”); Olympia Mortg. Corp. v. Pugh,
774 So. 2d 863, 867 (Fla. 4th DCA 2000) (confirming that voluntary dismissal of a
foreclosure action on an accelerated mortgage and note did not bar a subsequent
action on a later default); accord St. Louis Condo. Ass’n, Inc. v. Nationstar Mortg.
LLC, No. 14-21827-CIV, 2014 WL 6694780, at *2 (S.D. Fla. Nov. 26, 2014)
(“When a ‘mortgagee initiates a foreclosure action and invokes its right of
acceleration, if the mortgagee’s foreclosure action is unsuccessful for whatever
reason, the mortgagee still has the right to file later foreclosure actions-and to seek
acceleration of the entire debt-so long as they are based on separate defaults.’
Dorta v. Wilmington Trust Nat’l Assoc., 13–cv–185–Oc–10PRL, 2014 WL
1152917, at *2–4 (M.D. Fla. Mar. 24, 2014) (relying on Singleton v. Greymar
Assoc., 882 So. 2d 1004 (Fla. 2004) (per curium [sic])). Contrary to Plaintiff’s
assertions, ‘an unsuccessful foreclosure action does not subsequently render a
mortgage forever invalid and unenforceable.’ Id. Rather, the Note and Mortgage
remain enforceable and Defendant still has the right to file foreclosure actions
based on separate defaults.”); Diaz v. Deutsche Bank Nat’l Trust Co., No. 14-
22583-CIV, 2014 WL 4351411, at *3 (S.D. Fla. Sept. 2, 2014).2, 3
2 See generally In re Rogers Townsend & Thomas, PC, 773 S.E.2d 101, 106 (N.C.
Ct. App. 2015), referring to Singleton’s conclusion that a subsequent and separate
alleged default created a new and independent right in the lender to accelerate
payment on a note in a subsequent foreclosure action, and concluding:
We recognize that this view of foreclosure actions involving
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b. Singleton considered the view that an acceleration of payments once put at
acceleration on a note is not universal. See U.S. Bank Natl. Assn. v.
Gullotta, 120 Ohio St. 3d 399, 405, 899 N.E.2d 987, 992 (2008)
(holding that each missed payment under a promissory note and
mortgage did not give rise to a new claim because “[o]nce [the
borrower] defaulted and [the lender] invoked the acceleration clause
of the note, the . . . obligations to pay each installment merged into
one obligation to pay the entire balance on the note”). Even so,
Singleton’s pronouncement that an “acceleration and foreclosure
[action] predicated upon subsequent and different defaults present[s] a
separate and distinct” claim expresses the better reasoned view. 882
So. 2d at 1007.
3 This analysis of Singleton neither undermines nor contradicts prior Florida
Supreme Court or other Florida precedent, including the Supreme Court’s decision
in Travis Co. v. Mayes, 36 So. 2d 264, 265-66 (Fla. 1948). Travis does no more
than stand for the unremarkable proposition that when considering a mortgage that
contains an automatic acceleration clause “[t]he law is well settled that the Statute
of Limitations begins to run against a mortgage at the time the right to foreclose
accrues. The rule is also settled that when a mortgage in terms declares the entire
indebtedness due upon default of certain of its provisions or within a reasonable
time thereafter, the Statute of Limitations begins to run immediately [when] the
default takes place or the time intervenes.” Travis, 36 So. 2d at 376-77 (citations
omitted); see also Spencer v. EMC Mortg. Corp., 97 So. 3d 257, 260 (Fla. 3d
DCA 2012) (holding that a foreclosure action filed more than five years after
acceleration of the entire debt upon default was barred by the statute of
limitations); Greene v. Bursey, 733 So. 2d 1111, 1115 (Fla. 4th DCA 1999)
(holding that the statute of limitations began to run in that case from the date of
maturity because the lender had not sought to accelerate and foreclose following an
earlier default); Monte v. Tipton, 612 So. 2d 714, 716 (Fla. 2d DCA 1993) (stating
the general principle that the statute of limitations on a mortgage foreclosure action
does not begin to run until the last payment is due unless the mortgage contains an
acceleration clause which the mortgagee has chosen to exercise); accord Locke v.
State Farm Fire & Cas. Co., 509 So. 2d 1375, 1377 (Fla. 1st DCA 1987); see also
Smith v. F.D.I.C., 61 F.3d 1552, 1561-62 (11th Cir. 1995), and Harmony Homes,
Inc. v. U.S. on behalf of Small Bus. Admin., 936 F. Supp. 907, 911 (M.D. Fla.
1996) (similarly relying on Tipton, Locke, and Conner v. Coggins, 349 So. 2d 780
(Fla. 1st DCA 1997), for the general proposition that the statute of limitations
begins to run on a mortgage foreclosure action when the last payment is due except
when the mortgage includes an acceleration clause). The decision in Singleton
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issue is determinative, and rejected that proposition.
In coming to this conclusion, the Florida Supreme Court considered, and
expressly rejected the view espoused in Stadler v. Cherry Hill Developers, Inc.,
150 So. 2d 468 (Fla. 2d DCA 1963), that an acceleration of payments once put at
issue is determinative. In Stadler, the Second District held that acceleration of
payments in a foreclosure action on one defaulted installment payment put the
entire loan balance at issue, thereby precluding a second foreclosure action on a
subsequent default. Faced with a conflict between this determination in Stadler
and the Fourth District’s opinion in Singleton v. Greymar Associates, 840 So. 2d
356 (Fla. 4th DCA 2003), finding that a second foreclosure on a “new and different
breach” would not be precluded, the Supreme Court chose to adopt the view
employed by the Fourth District to find that a lender could maintain a separate
action for foreclosure for a default which occurred after acceleration on an earlier
default:
[W]e can envision many instances in which the application of the
Stadler decision would result in unjust enrichment or other inequitable
results. If res judicata prevented a mortgagee from acting on a
subsequent default even after an earlier claimed default could not be
established, the mortgagor would have no incentive to make future
timely payments on the note. The adjudication of the earlier default
would essentially insulate her from future foreclosure action on the
gives rise to no inconsistency in the law, and does nothing to change when the
clock starts ticking for statute of limitations purposes. Rather, Singleton provides
for new accelerations based on subsequent defaults—to which, of course, statutory
limitations periods apply.
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note—merely because she prevailed in the first action. Clearly,
justice would not be served if the mortgagee was barred from
challenging the subsequent default payment solely because he failed
to prove the earlier alleged default.
We must also remember that foreclosure is an equitable remedy
and there may be some tension between a court’s authority to
adjudicate the equities and the legal doctrine of res judicata. The ends
of justice require that the doctrine of res judicata not be applied so
strictly so as to prevent mortgagees from being able to challenge
multiple defaults on a mortgage. We can find no valid basis for
barring mortgagees from challenging subsequent defaults on a
mortgage and note solely because they did not prevail in a previous
attempted foreclosure based upon a separate alleged default.
Singleton, 882 So. 2d at 1007-08 (citation omitted).
Here we follow that choice. And, as have numerous post-Singleton courts
before us, we apply this determination, while made in the context of a res judicata
defense, to a statute of limitations defense. See, e.g., Brown, 175 So. 3d at 834
(applying Singleton to a statute of limitations defense); Evergrene Partners, Inc.,
143 So. 3d at 955, 956 (same); U.S. Bank Nat’l Ass’n v. Bartram, 140 So. 3d 1007,
1014 (Fla. 5th DCA 2014), review granted, 160 So. 3d 892 (Fla. Sept. 11, 2014)
(“Based on Singleton, a default occurring after a failed foreclosure attempt creates
a new cause of action for statute of limitations purposes, even where acceleration
had been triggered and the first case was dismissed on its merits. Therefore, we
conclude that a foreclosure action for default in payments occurring after the order
of dismissal in the first foreclosure action is not barred by the statute of limitations
found in section 95.11(2)(c), Florida Statutes, provided the subsequent foreclosure
10
action on the subsequent defaults is brought within the limitations period.”); Dorta,
2014 WL 1152917, at *6 (rejecting a claim that the statute of limitations barred
any further actions to foreclose after a previous action for foreclosure on an
accelerated loan had been involuntarily dismissed, finding that Singleton “directly
refutes this argument, holding that even where a mortgagee initiates a foreclosure
action and invokes its right of acceleration, if the mortgagee’s foreclosure action is
unsuccessful for whatever reason, the mortgagee still has the right to file later
foreclosure actions—and to seek acceleration of the entire debt—so long as they
are based on separate defaults”); see also Smathers v. Nationstar Mortg., LLC,
No.5:15-cv-415-Oc-30 PRL, 2014 WL 4639136, at *2 (M.D. Fla. Sept. 16, 2014)
(applying Singleton in a statute of limitations case and confirming that an
acceleration and foreclosure predicated upon a subsequent and different default
would not be barred by the dismissal of an earlier action predicated on a separate
and distinct default); accord LNB-017-13, LLC v. HSBC Bank USA, 96 F. Supp.
3d 1358, 1363-64 (S.D. Fla. 2015) (citing a litany of cases relying upon Singleton
to conclude that “the current state of the law does not support [a claim that] . . .
prior acceleration and expiration of the 5-year statute of limitations for foreclosure
actions bars all other foreclosure actions based on non-payment”).
We therefore conclude that dismissal of a foreclosure action accelerating
payment on one default does not bar a subsequent foreclosure action on a later
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default if the subsequent default occurred within five years of the subsequent
action. See Solenenko v. Georgia Notes 18, LLC, 182 So. 3d 876, 877 (Fla. 4th
DCA 2016) (“[T]he present action, which was brought in February 2014, was
based upon a different event of default [than the 2008 foreclosure action]—namely
the borrowers’ failure to make the payment due on March 1, 2009. . . . Therefore,
under this court’s precedent, the action was timely brought within the five-year
statute of limitations.”); Hicks, 178 So. 3d at 959 (finding that “Bank is not
precluded from filing a new foreclosure action based on different acts or dates of
default not previously alleged, provided that the subsequent foreclosure action on
the subsequent defaults is brought within the statute of limitations period found in
section 95.11(2)(c), Florida Statutes”); Evergrene Partners, Inc., 143 So. 3d at 956
(“While any claims relating to individual payment defaults that are now more than
five years old may be subject to the statute of limitations, each payment default
that is less than five years old . . . created a basis for a subsequent foreclosure
and/or acceleration action.” (quoting Kaan v. Wells Fargo Bank, N.A., 981 F.
Supp. 2d 1271, 1274 (S.D. Fla. 2013))); Bartram, 140 So. 3d at 1014 (concluding
that “a foreclosure action for default in payments occurring after the order of
dismissal in the first foreclosure action is not barred by the statute of limitations
found in section 95.11(2)(c), Florida Statutes, provided the subsequent foreclosure
action on the subsequent defaults is brought within the limitations period”); see
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also Kaan, 981 F. Supp. 2d at 1274 (finding that, under Singleton and section
95.11(2)(c), Wells Fargo was allowed to bring a subsequent foreclosure action
relating to subsequent payment defaults on the note and mortgage that were less
than five years old). It is the fact that the bank alleged the failure to pay the
October 1, 2006 installment payment “and all subsequent payments” that makes
the instant case fall within the rule as set out herein. (Emphasis added).
c. Whether a dismissal is with or without prejudice is irrelevant to a lender’s right
to file subsequent foreclosure actions on subsequent defaults.
Under Singleton, subsequent defaults allow for subsequent accelerations
regardless of the nature of a prior dismissal. A lender’s right to file a subsequent
action to foreclose on an accelerated note following a subsequent default does not
turn on whether the first action to foreclose on an earlier default and acceleration
was dismissed with or without prejudice. As Singleton teaches, even a dismissal
with prejudice which adjudicates the merits of a first filed foreclosure action only
precludes the lender from recovering on the underlying defaulted installment and
returns the lender and the borrower to the status quo which permits the lender to
file subsequent foreclosure actions based on subsequent defaults. See Singleton,
882 So. 2d at 1007 (“[I]f the plaintiff in a foreclosure action goes to trial and loses
on the merits, we do not believe such plaintiff would be barred from filing a
subsequent foreclosure action based upon a subsequent default. The adjudication
merely bars a second action relitigating the same alleged default. A dismissal with
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prejudice of the foreclosure action is tantamount to a judgment against the
mortgagee. That judgment means that the mortgagee is not entitled to foreclose
the mortgage. . . . Accordingly, we do not believe the dismissal of the foreclosure
action in this case barred the subsequent action on the balance of the note.”
(quoting Capital Bank v. Needle, 596 So. 2d 1134, 1138 (Fla. 4th DCA 1992))).
A dismissal without prejudice which does not adjudicate the merits of a first
filed foreclosure action, similarly can do no more than terminate a lender’s ability
to collect on the underlying defaulted installment, again leaving the lender free to
accelerate and file a subsequent foreclosure action for subsequent defaults. See
Brown, 175 So. 3d 834-35 (citations omitted) (“We find that appellant’s assertion
of the right to accelerate was not irrevocably ‘exercised’ within the meaning of
cases defining accrual for foreclosure actions, when the right was merely asserted
and then dismissed without prejudice. After the dismissal without prejudice, the
parties returned to the status quo that existed prior to the filing of the dismissed
complaint. As a matter of law, appellant’s 2012 foreclosure action, based on
breaches that occurred after the breach that triggered the first complaint, was not
barred by the statute of limitations.”).
Thus, as concluded in Bartram, and alluded to in Dorta, the “with” or
“without prejudice” dismissal is a distinction without a difference. Bartram, 140
So. 3d at 1013 n.1 (“We acknowledge that the Bank suffered a dismissal with
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prejudice of its earlier foreclosure action, unlike the dismissal in Dorta, but
conclude that the distinction is not material for purposes of the issue at hand.”);
Dorta, 2014 WL 1152917 at *6 n.3 (“Singleton involved a dismissal with
prejudice; whereas Citibank’s foreclosure action was merely dismissed without
prejudice. Dismissals without prejudice are not considered adjudications of the
merits, and therefore there was no effective acceleration of the Note and the
Mortgage.”); see also Espinoza v. Countrywide Home Loans Servicing, L.P., 2014
WL 3845795 at *4 (S.D. Fla. Aug. 5, 2014) (“Pursuant to Singleton, when ‘a
mortgagee initiates a foreclosure action and invokes its right of acceleration, if the
mortgagee’s foreclosure action is unsuccessful for whatever reason, the mortgagee
still has the right to file later foreclosure actions . . . so long as they are based on
separate defaults.’” (Emphasis added) (quoting Dorta, 2014 WL 1152917 at *6)).
As observed in In re Anthony, 534 B.R. 834, 838-39 (Bkrtcy. M.D. Fla. 2015),
“[t]he better view is that dismissals with and without prejudice operate in the same
manner with respect to the statute of limitations in mortgage foreclosures.”
Simply stated, the holding in Singleton cannot be distinguished away on a
with prejudice/without prejudice distinction. Whether voluntarily dismissed or
dismissed with or without prejudice the result is the same: upon dismissal,
acceleration of a note and mortgage is abandoned with the parties returned to the
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status quo that existed prior to the filing of the dismissed action, leaving the lender
free to accelerate and foreclose on subsequent defaults.
Finally, separate and apart from the analysis established by Singleton, case
law confirms “[w]hen an action is dismissed without a final adjudication on the
merits, the parties are left as if the suit had never been filed. Epstein v. Ferst, 35
Fla. 498, 509, 17 So. 414, 415 (1895); 1 Fla. Jur. 2d Actions § 220 (2003).” JB
Int’l, Inc. v. Mega Flight, Inc., 840 So. 2d 1147, 1150 (Fla. 5th DCA 2003). Thus,
when the first foreclosure in this case was dismissed without prejudice, under
established Florida case law, the parties were returned to their prior positions and
nothing barred a new and timely action for acceleration and foreclosure. Epstein,
17 So. at 415 (“A dismissal ‘without prejudice’ leaves the parties as if no action
had been instituted.”).
2. The lender in this case was under no obligation, contractually or legally, to
“decelerate” this loan following dismissal.
a. The mortgage itself confirms that the installment nature of the loan continues
even after acceleration.
There was no obligation on the bank to take any action to “decelerate” this
loan following dismissal of the first foreclosure action because the mortgage itself
confirms that the installment nature of the loan continues even after acceleration
and the filing of a foreclosure action:
19. Borrower’s Right to Reinstate After Acceleration. If
Borrower meets certain conditions, Borrower shall have the
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right to have enforcement of this Security Instrument
discontinued at any time prior to the earliest of ... (c) entry of
a judgment enforcing this Security Instrument. Those conditions
are that Borrower ... (a) pays Lender all sums which then would
be due under this Security Instrument and the Note as if no
acceleration had occurred . . . . Upon reinstatement by
Borrower, this Security Instrument and obligations secured hereby
shall remain fully effective as if no acceleration had occurred.
(Emphasis added).
This provision, while addressing only a borrower’s right to cure, confirms that
after acceleration, the borrower is not obligated to pay the entire accelerated balance
due to cure but, until a final judgment is entered, need only bring the loan current to
avoid foreclosure. Stated another way, despite acceleration of the balance due and
the filing of an action to foreclose, the installment nature of a loan secured by such
a mortgage continues until a final judgment of foreclosure is entered and no action
is necessary to reinstate it via a notice of “deceleration” or otherwise. As our sister
court has confirmed, “[a]fter the dismissal . . . the parties returned to the status quo
that existed prior to the filing of the dismissed complaint.” Brown, 175 So. 3d at
835. No further acts were necessary on the bank’s part to “decelerate” this loan.
See Matos v. Bank of New York, 2014 WL 3734578 at *1 (S.D. Fla. July 28,
2014) (“The statute of limitations has not run on this foreclosure action due to the
dismissal of the prior foreclosure action, which decelerated the notice of
acceleration.”).
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Even if such an affirmative act were required to decelerate this loan and to
reinstate its installment nature, the failure to do so following dismissal of the first
action would not preclude the instant action. This is because the mortgage at issue
here clearly states that the bank’s failure to act will not work as a waiver of its
rights under the note and mortgage:
UNIFORM COVENANTS. Borrower and Lender covenant and agree
as follows:
...
12. Borrower Not Released; Forbearance By Lender Not a
Waiver. Extension of the time for payment or modification of
amortization of the sums secured by the Security Instrument granted
by Lender to Borrower or any Successor in Interest of Borrower shall
not operate to release the liability of Borrower or any Successors in
Interest of Borrower. Lender shall not be required to commence
proceedings against any Successor in Interest of Borrower or to refuse
to extend time for payment or otherwise modify amortization or the
sums secured by this Security Instrument by reason of any demand
made by the original Borrower or any Successors in Interest of
Borrower. Any forbearance by Lender in exercising any right or
remedy including, without limitation, Lender’s acceptance of
payments from third persons, entities or Successors in Interest of
Borrower or in amounts less than the amount then due, shall not be a
waiver of or preclude the exercise of any right or remedy.
(Emphasis added).
Likewise the note provides for no waiver of the noteholder’s right to
payment:
6. BORROWER’S FAILURE TO PAY AS REQUIRED
....
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(D) No Waiver By Note Holder
Even, if, at a time when I am in default, the Note Holder does not
require me to pay immediately in full as described above, the Note
Holder will still have the right to do so if I am in default at a later
time.
Because the installment nature of the loan at issue did not terminate following
acceleration and foreclosure, and because dismissal of the foreclosure action returned
the parties to the status quo existing before acceleration, the bank was under no
obligation to take any affirmative action to reinstate the installment nature of the loan
or to “decelerate.”
b. This reading of the mortgage contract is in accord with Florida and national
mortgage industry practices and best serves the interests of both mortgagees and
mortgagors.
This conclusion is wholly consistent with both national and local industry
custom and practice. As amici Fannie Mae and Freddie Mac4 advise in an amicus brief
provided on request, the mortgage at issue here is one of their “uniform mortgage
instrument[s]” drafted “to ensure uniformity in the residential housing finance market”
nationwide. According to them, paragraph 19, the reinstatement provision, was
inserted into their standard mortgage forms to benefit defaulting borrowers by
allowing them to avoid foreclosure by catching up on missed installment payments
rather than having to pay the entire balance of a loan following acceleration. This,
4 The purpose of these entities, we are advised, is to assure greater access to mortgage
credit while promoting liquidity, stability and affordability in the residential real estate
market.
19
according to Fannie Mae and Freddie Mac, effectively preserves the installment nature
of a loan even after acceleration making “deceleration” unnecessary following
dismissal of a foreclosure action:
Because a borrower defaulting on his or her installment obligations has a
continuing right to reinstate the Mortgage until entry of judgment (at
which time the Mortgage ceases to exist), the installment nature of the
contract exists for as long as the Mortgage does. Therefore, no
affirmative act is necessary to reinstate the Mortgage’s installment
obligations after dismissal. . . .[5]
Adding support to our conclusion, both The Business Law Section6 of The
Florida Bar and The Real Property Probate & Trust Law Section7 of The Florida Bar
confirm that the custom and practice in Florida is to treat a dismissal of a
5 As these amici note, “after dismissal, the lender no longer has any claim to the fully-
accelerated amount, only the past-due payments.” Were this not true, “a lender that
receive[d] a payment from a reinstating borrower for less than the fully-accelerated
amount after accelerating the loan could simply return that payment and proceed with
its foreclosure. But the Reinstatement Provision [paragraph 19] prohibits that.”
Moreover, we are advised, if lenders were obligated to take some affirmative act to
“decelerate” following dismissal, a lender could unilaterally nullify the reinstatement
provision, refuse to decelerate, and obligate the borrower to pay the entire accelerated
amount.
6The Business Law Section of The Florida Bar is comprised of almost 6,000 Bar
members who routinely represent both lenders and borrowers.
7 The Real Property Probate & Trust Law Section of The Florida Bar is comprised
of over 10,000 Bar members who practice in the areas of real estate, guardianship,
trust and estate law, and who are dedicated to serving all Florida lawyers and the
public in these fields of practice. The Section produces educational materials and
seminars, assists the public pro bono, drafts legislation, drafts rules of procedure,
and occasionally serves as a friend of the court to assist on issues related to their
fields of practice.
20
foreclosure action as “decelerating” an acceleration made in a foreclosure action.
See Cooke v. Commercial Bank of Miami, 119 So. 2d 732, 735 (Fla. 3d DCA
1960) (concluding “customs and usages of the banking business may have a
binding force as between banks, and between a bank and the person with whom it
deals in the absence of an express agreement to the contrary”); see also Sabatino v.
Curtiss Nat’l Bank of Miami Springs, 446 F.2d 1046, 1053 (5th Cir. 1971)
(“Absent instructions or an express agreement to the contrary, general customs and
usage of the banking business may have a binding effect between banks, and
between a bank and the person with whom it deals.”).
In response to a number of inquiries posed by this court, The Real Property
Probate & Trust Law Section reviewed the underlying mortgage and facts herein
and relying on Florida statutes and case law provided the following responses
which confirm our conclusion that the installment nature of the a loan continues
following acceleration and that the practice in this State is that no more than
dismissal of a foreclosure action is necessary to “decelerate” an accelerated loan:
1. Where a foreclosure action has been dismissed with the note and
mortgage still in default:
a. Does the dismissal of the action, by itself, revoke the acceleration
of the debt balance thereby reinstating the installment terms?
The Section responds:
The optional acceleration the lender exercised as part of the
foreclosure process could not be effectuated until entry of the
21
foreclosure judgment. Until then, that acceleration was subject to the
foreclosure proceeding being dismissed for various reasons, including
the borrower’s contractual right to reinstate and discontinue the
foreclosure action by curing the past installment payment default.
Absent a contrary provision in the mortgage contract, Florida law
and equitable principles generally dictate the conclusion that no
further affirmative act of deceleration is necessary. The dismissal
itself should serve to revoke the acceleration made as part of the now
dismissed foreclosure process and the parties should be deemed to
have returned to their pre-filing status quo.
b. Absent additional action by the mortgagee can a subsequent claim
of
acceleration for a new and different time period be made?
The Section responds:
Yes. The installment nature of the mortgage loan, the terms of this
form of mortgage, Florida case law and equitable principles dictate
allowing a subsequent acceleration and foreclosure action for any
new and different default.
c. Does it matter if the prior foreclosure action was voluntarily or
involuntarily dismissed, or whether the dismissal was with our
without prejudice?
The Section responds:
The nature of the dismissal in a prior foreclosure action should not
matter in a subsequent foreclosure based on a default occurring after
the default that precipitated the prior foreclosure action. However,
the
nature of the dismissal may matter if the statute of limitations or
doctrine of res judicata is applicable to the default at issue in the
prior
foreclosure action.
d. What is the customary practice?
e. The Section responds:
22
The RPPTL Section defers to the response in the Business Law
Section
of the Florida Bar’s amicus brief. That response is consistent with the
RPPTL Section’s understanding of the customary practice. [The BLS
responded: the customary practice appears to be acceleration of
“optional acceleration” loans through the filing of suit and not
through acceleration notices. Accordingly, the customary practice
amongst the BLS’s members appears to be based on Singleton and
that filing of a new suit is permitted on a mortgage that contains an
optional acceleration clause, whether the prior suit was terminated by
voluntary dismissal or otherwise.]
2. If an affirmative act is necessary by the mortgagee to accelerate a
mortgage, is an affirmative act necessary to decelerate?
The Section responds:
Unless the mortgage contract or the mortgagee’s acceleration
otherwise dictates, the dismissal of the foreclosure action should be
deemed a deceleration returning the parties to the status quo.
3. In light of Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla.
2004), is deceleration an issue or is deceleration inapplicable if a
different and subsequent default is alleged?
The Section responds:
Under the terms of the mortgage in this case, Singleton dictates the
conclusion that deceleration after the dismissal of a prior foreclosure
action is not an issue (or is inapplicable) in a subsequent foreclosure
based on a different and subsequent alleged default.
The sum of these responses is that the custom and practice nationwide and in
Florida is consistent with Singleton and that a loan accelerated for one default is
“decelerated” upon dismissal (whether with or without prejudice).
23
In fact, after the dismissal in this case, the bank treated the loan as
decelerated. After the dismissal, the bank sent Beauvais a letter demanding—not
the full amount of the accelerated loan—but only the amount due from the date of
default to the date of the letter. In the letter, the bank also noted that the next
installment payment was still due on the next payment date, which it provided.
The bank’s demand for less than the full amount of the accelerated loan, and the
bank’s notice that the next individual installment payment remained due, is
consistent only with the bank’s treatment of the loan as decelerated. Thus, the
Florida Supreme Court’s ruling in Singleton and our decision here, track the actual
and best practices of the industry regarding deceleration in these circumstances.
There is no reason for courts to structure artificial rules regarding acceleration and
deceleration at odds with how these matters are actually treated by borrowers and
lenders in the marketplace.
3. The decisions of other states in no way militate against our analysis herein.
There is nothing new or novel in this mode of proceeding. And the view
taken in Singleton does not make Florida an outlier in the law. Amici, National
Association of Consumer Advocates, The National Consumer Law Center, and the
Jerome N. Frank Legal Services Organization at the Yale Law School submitted a
joint brief on rehearing en banc, which set forth and examined the relatively few
opinions from states that have considered the import of a dismissal of a foreclosure
24
action on an accelerated note and/or the circumstances whereby the lender may
reinstate a mortgage after acceleration. Of the jurisdictions that have considered
the issue, few appear to have addressed whether some affirmative act is necessary
to “decelerate” an accelerated loan following dismissal of a foreclosure action.
As for the approximately fifteen states8 where, like Florida, home loans are
secured by mortgages which require judicial intervention to foreclose, the cases
cited to us by these amici confirm that only one appears to have actually
determined that some affirmative act following dismissal must be taken to
“decelerate” an accelerated loan. See, e.g., Fed. Nat’l Mortg. Ass’n v. Mebane,
618 N.Y.S.2d 88, 89 (N.Y. App. Div. 1994) (confirming that the intermediate
appellate courts of New York have taken the position that dismissal of a
foreclosure action does not work a “deceleration” and a lender must take an
affirmative step to revoke an election to accelerate). By contrast, at least one
Indiana court in a “nearly identical situation” to Singleton, has cited with approval
8 Connecticut: Conn. Gen. Stat. §§ 49-1 to 49-31v; Delaware: Del. Code Ann. tit.
10 §§ 5061 through 5067; Illinois: 735 Ill. Comp. Stat §§ 5/15-1501 to 5/15-1605;
Indiana: Ind. Code §§ 32-30-10-1 to 32-30-10-14; Kansas: Kan. Stat. Ann. § 60-
2410; Kentucky: Ky. Rev. Stat. Ann. § 426.005; Louisiana: La. Code Civ. Proc.
Ann. arts. 3721 to 3723; Maine: Me. Rev. Stat. Ann. tit. 14, §§ 6321 to 6326; New
Jersey: N.J. Stat. Ann. §§ 2A:50-1 to 2A:50-73; New York: N.Y. Real Prop. Acts.
Law §§ 1301 to 1391; North Dakota: N.D. Cent. Code §§ 32-19-01 to 32-19-41;
Ohio: Ohio Rev. Code Ann. § 2323.07; Pennsylvania: 35 Pa. Stat. Ann. §§
1680.402c to 1680.409c; South Carolina: S.C. Code Ann. §§ 29-3-610 to 29-3-790.
25
and relied upon Singleton. See Afolabi v. Atlantic Mort. & Inv. Corp., 849 N.E.
2d 1170, 1174-75 (Ind. Ct. App. 2006).
As for the remainder of the cases cited to us by amici, the issue remains
largely undecided. See Johnson v. Samson Constr. Corp, 704 A.2d 866, 869 (Me.
1997) (mentioning the issue in dicta in a case that determined, contrary to the
position taken in Singleton, that a dismissal with prejudice of a foreclosure action
for failure to file a report by counsel constituted an adjudication on the merits
which precluded a subsequent foreclosure action); U.S. Bank Nat’l Ass’n v.
Gullotta, 899 N.E.2d 987, 992-93 (Ohio 2008) (similarly where the Supreme
Court of Ohio mentioned the issue in dicta in a decision apparently limited to its
facts and which, again contrary to Singleton, confirmed that there each missed
installment payment does not yield a new claim); Hamlin v. Peckler, NO. 2005-
SC-000166-MR, 2005 WL 3500784, at *2 (Ky. Dec. 22, 2005) (addressing the
issue once, in an unpublished, never-again cited opinion that ultimately did not
reach the merits of the issue for procedural reasons); Harrison v. Smith, 814 So. 2d
42, 45-46 (La. Ct. App. 2002) (addressing the issue in the context of a note with no
reinstatement provision and later cited only twice for a different proposition); Fid.
Bank v. Krenisky, 807 A.2d 968, 975 (Conn. App. Ct. 2002) (addressing the issue
in the context of an acceleration via a pre-suit letter and finding that “[b]ecause the
mortgage documents required no additional notice of default prior to the plaintiff’s
26
commencement of its second foreclosure action, that component of the defendants’
first special defense is legally insufficient”).
The remaining five cases cited to us by amici come from deed-of-trust states9
which, unlike Florida, generally require no judicial intervention to foreclose. See
55 Am.Jur.2d Mortgages §553 (2015) (“The power of sale in a deed of trust is a
contractual arrangement in a mortgage or a deed of trust which confers upon the
trustee or mortgagee the ‘power’ to sell the real property mortgaged without any
order of court in the event of a default.”) (Citation omitted). For the most part,
these decisions do not demonstrate that Florida is an outlier on this issue because
they: (1) address the issue in unpublished opinions with no precedential value, see
Kirsch v. Cranberry Fin., LLC, 178 Wash. App. 1031 (Wash Ct. App. 2013),
Wood v. Fitz-Simmons, No. 2 CA-VC 2008-0041, 2009 WL 580784 (Ariz. Ct.
App., Mar. 6, 2009), and Cadle Co. II, Inc. v. Fountain, 281 P.3d 1158 (Nev.
2009); (2) are rarely if ever cited as authority, see Kirsch, 178 Wash. App. 1031
(cited once); Wood, 2009 WL 580784 (no citations), Cadle Co. II, Inc., 281 P.3d
1158 (cited twice, including by the panel in this case); (3) are governed by a statute
which expressly provides, unlike in Florida, that the statute of limitations runs
from the accelerated due date of the loan, see Kirsch, 178 Wash. App. 1031, at *4-
5; or (4) do not even address the issue. See Murphy v. HSBC Bank USA, 95 F.
9 We note that there are a handful of states which allow both judicial and non-
judicial foreclosure.
27
Supp. 3d 1025 (S.D. Tex. 2015) (involving an independent action challenging the
mortgagee’s standing to foreclose a deed-of-trust in a non-judicial proceeding);
Khan v. GBAK Props., Inc., 371 S.W.3d 347, 352 (Tex. Civ. App. 2012)
(addressing whether the note holder had abandoned its prior acceleration—which
had been accomplished through an acceleration letter—by continuing to accept
payments on the note at a later date); Bankers Trust Co. of California, N.S. v.
Baca, 151 P.3d 88, 90-91 (N.M. Ct. App. 2006) (which stands for the rather
unremarkable proposition that while res judicata did not prevent the filing of the
second foreclosure action, the second action was nevertheless subject to the
applicable statute of limitations that ran from the due date of the installment
payment the mortgagor failed to make, as is the case with any installment
contract).10
In short, by our estimation there is hardly a consensus in this area of the law
outside of Florida and by no stretch of the imagination can Florida be labeled as an
“outlier” on this point. Thus, while we do not question that several courts across
the country have adopted reasoning different from that accepted in Florida, the
point is our Supreme Court has rejected that different analysis. See Singleton, 882
10 Because this case did not involve an acceleration by letter, this opinion in no
way addresses what, if any, notice of deceleration would be required in such an
instance. In that same vein, that non-involvement of judicial process may explain
why deed-of-trust states may reach a different conclusion as to the requirement of
notice of deceleration, as without court participation, the mortgagor may rightly
need some notice that acceleration is no longer at issue.
28
So. 2d 1006 (disapproving Stadler’s conclusion at 150 So. 2d at 472, “that an
election to accelerate puts all future installment payments in issue and forecloses
successive suits”). Instead, citing both legal and equitable reasons, Singleton
chose to conclude a subsequent default created a new right to accelerate,11 making
the dismissal of the prior action for acceleration—with or without prejudice—non-
determinative of a different and subsequent claim.
4. Concerns raised in the dissent.
In summary, as set out above, we reject the dissent’s concerns in the
following manner:
1) Our analysis in no way perpetuates an upheaval to the contract at issue.
As the dissent admits, the instant contract does not address the result of a
dismissal or the rights or obligations of the parties thereafter. In fact, the
dissent’s conclusion that the lender waived its right to accelerate when it
failed to decelerate the loan following dismissal is in express
contradiction to paragraph 12 of the mortgage and paragraph 6 of the
note, both of which specifically provide that any forbearance by the
lender in exercising any right or remedy shall not be a waiver or preclude
the exercise of that right or remedy.
2) Our analysis in no way perpetuates an upheaval to the statute of
limitations. We do not suggest that the statute of limitations becomes a
nullity. Rather, under Singleton, dismissal of a foreclosure action
accelerating payment on one default does not bar a subsequent
foreclosure action accelerating payment on a later default if the
11The Court having spoken, it is our obligation to follow that instruction. See
Hoffman v. Jones, 280 So. 2d 431, 434 (Fla. 1973) (“To allow a District Court of
Appeal to overrule controlling precedent of this Court would be to create chaos and
uncertainty in the judicial forum, particularly at the trial level.”).
29
subsequent default occurred within five years of the subsequent action
and acceleration.
3) Our analysis in no way perpetuates an upheaval to long-standing law on
the effect of a dismissal. Rather, as previously stated, the law has been
and continues to be that an action dismissed without a final adjudication
on the merits leaves the parties as though the suit had never been filed,
which is no more than exactly the conclusion we reach herein.
4) Our conclusion in no way results in a cataclysmic change in Florida law
or the way in which lenders proceed against defaulting borrowers.
Rather, as Fannie Mae, Freddie Mac, and the Florida Bar confirm, our
analysis is in keeping with the understanding of members of the
mortgage industry and those who represent both borrowers and lenders.
5) Our conclusion is not the result of any perceived “moral imperative” or
quest for equity run amuck. Rather, it is the result of what the Supreme
Court has said, what the contract provides, and what a dismissal does.
5. Conclusion.
In sum, after the 2010 dismissal without prejudice of the predecessor
mortgagee’s foreclosure action, the parties returned to the status quo that existed
prior to the filing of the dismissed complaint. As a matter of law, the bank’s 2012
foreclosure action, based on breaches that occurred after the breach that triggered
the first complaint, was not barred by the statute of limitations. So says Singleton,
as well as the terms of the parties’ mortgage and note. This resolution is in
keeping with the long held practices of the Florida mortgage industry and
moreover, best protects the interests of both mortgagees, who are not left with
nullified mortgages, but also mortgagors, who by the terms of their mortgages, are
30
permitted any time before judgment, to become current on their mortgage
obligation.
Additionally, as should be apparent from the analysis outlined above, we
likewise reverse that portion of the trial court's order which declared that the
mortgage was null and void, canceled same, and quieted title to the property in
favor of the Association. The Legislature, by its express language, provided that
the mortgage lien under section 95.281(1)(a) would terminate five years after a
maturity date that can be determined from the face of a recorded document. The
face of the recorded mortgage in the instant case reveals a maturity date of March
1, 2036. Therefore, and pursuant to section 95.281(1)(a), the mortgage lien remains
valid until March 1, 2041, five years from the date of maturity as reflected in the
recorded mortgage securing the obligation.
Accordingly, we reverse the order under review and remand this cause to the
trial court for further proceedings consistent with this opinion.
SUAREZ, C.J., and ROTHENBERG, LAGOA, FERNANDEZ and
LOGUE, JJ., concur.
31
Deutsche Bank Trust Co. Americas, etc. v. Harry Beauvais,
and Aqua Master Association, Inc., etc.
3D14-575
SCALES, J. (dissenting)
I respectfully dissent. In my view, contrary to the majority’s conclusion,
Singleton v. Greymar Associates12 does not fundamentally alter, sub silentio,
decades of Florida statute of limitations jurisprudence.
I. Overview
The statute of limitations for a foreclosure action is five years from when the
last element constituting the cause of action occurs. § 95.11(2)(c), Fla. Stat. (2013).
When, as here, a mortgage secures a promissory note containing an optional
acceleration clause, the statute of limitations begins to run from the date the lender
exercises its acceleration right. Greene v. Bursey, 733 So. 2d 1111, 1114-15 (Fla.
4th DCA 1999); Monte v. Tipton, 612 So. 2d 714, 716 (Fla. 2d DCA 1993); see
also Smith v. Fed. Deposit Ins. Corp., 61 F.3d 1552, 1561 (11th Cir. 1995); Erwin
v. Crandall, 175 So. 862, 863 (Fla. 1937); Spencer v. EMC Mortg., 97 So. 3d 257,
260 (Fla. 3d DCA 2012).
In this case, after the borrower Harry Beauvais defaulted by failing to make
the installment payment due on September 1, 2006, the lender (plaintiff Deutsche
Bank’s predecessor-in-interest) exercised its option to accelerate all amounts due
12 882 So. 2d 1004 (Fla. 2004)
32
on January 22, 2007. Deutsche Bank’s instant foreclosure lawsuit was filed on
December 18, 2012, well beyond the five-year statute of limitations.
Relying on almost eighty years of well-established Florida jurisprudence, the
trial court granted the defendant’s motion for summary judgment on this issue, and
a panel of this Court unanimously affirmed the trial court’s determination in that
regard. Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575 (Fla. 3d
DCA Dec. 17, 2014).
Relying on a sweepingly broad interpretation of Singleton v. Greymar
Associates – a Florida Supreme Court case in which the term “statute of
limitations” is not even mentioned – the en banc majority opinion reverses the
summary judgment and, in the process: (i) creates the legal fiction that a lender’s
acceleration does not affect the installment nature of the note; (ii) rewrites the
acceleration and reinstatement provisions of the parties’ note and mortgage; and
(iii) effectively rewrites the statute of limitations for mortgage foreclosure actions
in Florida.
Specifically, the majority opinion holds both (a) that a borrower’s obligation
to make, and a lender’s obligation to accept, monthly installment payments on an
installment note continue after the lender’s acceleration; and (b) that irrespective
of the nature of the dismissal, as a matter of law, any dismissal of a foreclosure
33
lawsuit nullifies the lender’s prior acceleration and reinstates the installment nature
of the previously accelerated note, as if the lender had never exercised acceleration.
In my view, not only are these two holdings inconsistent with each other,
but, when taken together, these holdings effectively rewrite Florida statute of
limitations jurisprudence in foreclosure cases. Singleton can, and should, be read in
harmony with – rather than to upend – significant Florida precedent regarding
installment note acceleration, mortgage foreclosure, and limitations of actions.
II. Facts
A. The Promissory Note
On February 10, 2006, Beauvais borrowed $1,440,000 from plaintiff’s
predecessor-in-interest, American Broker’s Conduit. Beauvais’s loan was
memorialized with a promissory note, requiring Beauvais to repay the loan by
making monthly installment payments over thirty years.
The installment nature of the note (which obligates the borrower to repay the
loan in prescribed monthly installments, and which obligates the lender to accept
such payments) is plainly, precisely, and expressly defined in paragraphs 3(A) and
(B) of the note:
I will make a payment every month . . . . I will make my monthly
payment on the 1st day of each month beginning on April 1, 2006. I
will make these payments every month until I have paid all of the
Principal and interest and any other charges described below that I
may owe under this Note. Each monthly payment will be applied as of
its scheduled due date, and if the payment includes both principal and
34
interest it will be applied to interest before Principal . . . . I will make
my monthly payments at [address of lender] . . . . My monthly
payment will be in the amount of U.S. $10,050.00 for the first 120
months of this Note, and thereafter will be in the amount of U.S.
$12,382.96. The Note Holder will notify me prior to the date of
change in monthly payment.
The note’s maturity date is expressly defined as March 1, 2036. Specifically,
the note reads as follows: “If, on March 1, 2036, I still owe amounts under this
Note, I will pay those amounts in full on that date, which is called the ‘Maturity
Date.’”
In its paragraph 6(C), the note contains the following default/acceleration
provision that, upon the borrower’s default, gives the lender an option to accelerate
all amounts due under the note, thereby advancing the note’s maturity date:
If I am in default, the Note Holder may send me a written notice
telling me that if I do not pay the overdue amount by a certain date,
the Note Holder may require me to pay immediately the full amount
of Principal which has not been paid and all the interest that I owe on
that amount. That date must be at least 30 days after the date on which
the notice is mailed to me or delivered by other means.
Recognizing that the note is secured by a uniform mortgage (that is, a
security instrument), paragraph 10 of the note contains the following language
related to the default/acceleration provisions in the accompanying mortgage:
That Security Instrument describes how and under what conditions I
may be required to make immediate payment in full of all amounts I
owe under this Note. Some of those conditions are described as
follows:
35
....
If Lender exercises this option, Lender shall give Borrower notice of
acceleration. The notice shall provide a period of not less than 30 days
from the date the notice is given . . . within which Borrower must pay
all sums secured by this Security Instrument. If Borrower fails to pay
these sums prior to the expiration of this period, Lender may invoke
any remedies permitted by this Security Instrument without further
notice or demand on Borrower.
B. The Mortgage
Beauvais’s note was secured by a mortgage, encumbering a unit in the
Chatham at Aqua condominiums in Miami Beach.
Consistent with the above-cited default language in the note, paragraph 22 of
Beauvais’s mortgage contains the following acceleration/remedy provision:
Acceleration; Remedies. Lender shall give notice to Borrower prior
to acceleration following Borrower’s breach of any covenant or
agreement in this Security Instrument . . . . The notice shall specify:
(a) the default; (b) the action required to cure the default; (c) a date,
not less than 30 days from the date the notice is given to Borrower, by
which the default must be cured; and (d) that failure to cure the
default on or before the date specified in the notice may result in
acceleration of the sums secured by this Security Instrument,
foreclosure by judicial proceeding and sale of the Property. The
notice shall further inform Borrower of the right to reinstate after
acceleration and the right to assert in the foreclosure proceeding the
non-existence of a default or any other defense of Borrower to
acceleration and foreclosure. If the default is not cured on or before
the date specified in the notice, Lender at its option may require
immediate payment in full of all sums secured by this Security
Instrument without further demand and may foreclose this Security
Instrument by judicial proceeding.
36
In paragraph 19 of the Beauvais mortgage, the parties painstakingly and
precisely detail the conditions precedent in order for the installment nature of the
note to be reinstated after the lender has exercised its option to accelerate.
Paragraph 19 reads as follows:
Borrower’s Right to Reinstate After Acceleration. If Borrower
meets certain conditions, Borrower shall have the right to have
enforcement of this Security Instrument discontinued at any time prior
to the earliest of: (a) five days before sale of the Property pursuant to
any power of sale contained in this Security Instrument; (b) such other
period as Applicable Law might specify for the termination of
Borrower’s right to reinstate; or (c) entry of judgment enforcing this
Security Instrument. Those conditions are that Borrower: (a) pays
Lender all sums which then would be due under this Security
Instrument and the Note as if no acceleration had occurred; (b) cures
any default of any other covenants or agreements; (c) pays all
expenses incurred in enforcing this Security Instrument, including,
but not limited to, reasonable attorneys’ fees, property inspection and
valuation fees, and other fees incurred for the purpose of protecting
Lender’s interest in the Property and rights under this Security
Instrument; and (d) takes such action as Lender may reasonably
require to assure that Lender’s interest in the Property and rights
under this Security Instrument, and Borrower’s obligation to pay the
sums secured by this Security Instrument, shall continue unchanged.
Lender may require that Borrower pay such reinstatement sums and
expenses in one or more of the following forms, as selected by
Lender: (a) cash; (b) money order; (c) certified check, bank check,
treasurer’s check or cashier’s check, provided any such check is
drawn upon an institution whose deposits are insured by a federal
agency, instrumentality or entity; or (d) Electronic Funds Transfer.
Upon reinstatement by Borrower, this Security Instrument and
obligations secured thereby shall remain fully effective as if no
acceleration had occurred. However, this right to reinstate shall not
apply in the case of acceleration under Section 18.
37
In sum, the parties’ note and mortgage provide a contractual mechanism
both: (i) for Beauvais to prevent the lender from exercising its right to acceleration
after a default and the lender’s notice thereof; and (ii) for Beauvais to reinstate the
installment nature of the note after the lender has exercised its right to acceleration.
Neither the note nor the mortgage contain any provision reinstating the
installment nature of the note if, after acceleration, a lender foreclosure action is
dismissed.
C. The First Lawsuit and its Disposition
After Beauvais failed to make the September 2006 installment payment due
on his promissory note, American Home Mortgage, Inc. (“AHMS”), the successor
to Beauvais’s initial lender, exercised its contractual right to accelerate the total
amount due on the note.13
In its January 22, 2007 complaint, AHMS alleged that Beauvais then owed
AHMS the sum of $1,439,976.80 in principal, plus interest accrued from August 1,
13 The lender’s acceleration is memorialized in its January 22, 2007 foreclosure
lawsuit. Paragraph 4 of AHMS’s complaint reads as follows: “Defendant, HARRY
BEAUVAIS, failed to pay the payment due on the Note on September 1, 2006, and
Plaintiff elected to accelerate payment of the balance.” Similarly, paragraph 14 of
the complaint reads as follows: “Plaintiff declares the full amount payable under
the Note and Mortgage to be due.”
The record is unclear as to whether AHMS exercised its right to accelerate
prior to the filing of its complaint. Even if AHMS had accelerated Beauvais’s note
earlier, such a fact would have no relevance as to whether the statute of limitations
had run by the time Deutsche Bank filed the instant action, more than five years
after the first action was filed.
38
2006. The complaint identifies the default date as September 1, 2006, and names as
defendants both Beauvais and the Chatham at Aqua Condominium Association.14
Almost four years after AHMS’s foreclosure lawsuit was filed, the trial court
set the matter for a December 6, 2010 case management conference. The trial
court’s order setting the case management conference required the attendance of all
parties at the conference. AHMS failed to appear at the conference. As a result,
the trial court dismissed the case without prejudice. The adjudicative portion of
the trial court’s form order, dated December 6, 2010, reads, in its entirety, as
follows: “The Plaintiff failed to appear without explanation. Therefore, this case is
dismissed without prejudice.”
Nothing in the trial court’s order reinstates the installment nature of the loan
or adjudicates AHMS’s acceleration as ineffective in any regard.
Nothing in the record indicates that, upon entry of the trial court’s December
6, 2010 dismissal order, either AHMS or Beauvais treated this order as: (i)
reinstating the installment nature of the loan, (ii) nullifying AHMS’s prior
acceleration, or (iii) readjusting the note’s maturity date from January 22, 2007
(the advanced maturity date after acceleration), to March 1, 2036 (the pre-
14Subsequent to the recordation of the mortgage, Beauvais’s master condominium
association placed an inferior lien on Beauvais’s condominium unit for unpaid
condominium assessments. AHMS sought to foreclose this inferior lien.
39
acceleration maturity date expressed in the note). Moreover, it is undisputed that
Beauvais never exercised, nor sought to exercise, the “reinstatement after
acceleration” provision of paragraph 19 of the mortgage.
D. The Instant Lawsuit and its Disposition
On November 2, 2012, Homeward Residential, Inc., a loan servicer working
on behalf of AHMS’s successor, Deutsche Bank, sent Beauvais a pre-acceleration
default notice.
This notice stated that Beauvais defaulted on the note by failing to make the
installment payment due on October 1, 2006 (as opposed to the September 1, 2006
default date alleged in AHMS’s acceleration), and that Beauvais owed Deutsche
Bank the sum of $796,161.19, which the letter describes as “the sum of payments
that have come due on or after the date of default 10/01/2006, any late charges,
periodic adjustments to the payment amount (if applicable) and expenses of
collection.”
This notice also purports to give Beauvais through December 7, 2012
(thirty-five days from the date of the notice), to make the $796,161.19 payment in
order to avoid a second acceleration and foreclosure lawsuit.
Nothing in this November 2, 2012 letter references AHMS’s January 22,
2007 acceleration, any nullification of that acceleration, any reinstatement of the
installment nature of the loan, or why Homeward Residential waited more than six
years after the alleged October 1, 2006 default to send this notice.
40
On December 18, 2012, Deutsche Bank filed the instant verified complaint
for foreclosure. In its complaint, Deutsche Bank purports to exercise its option to
accelerate a second time, alleging an October 1, 2006 default date (as opposed to
the September 1, 2006 default date identified in the first complaint). The verified
complaint alleges an accelerated amount then owed to plaintiff of $1,439,976.80
(the exact same accelerated amount alleged in AHMS’s initial foreclosure
complaint, filed almost six years earlier).
Deutsche Bank’s complaint contains no allegations suggesting that AHMS’s
initial acceleration was, in any way, ineffective. In fact, Deutsche Bank’s
complaint contains no allegations whatsoever regarding the January 2007
acceleration, any reinstatement of the installment nature of note occurring after that
January 2007 acceleration, or why the complaint is being filed more than six years
beyond the date of the alleged October 1, 2006 default.
By the time Deutsche Bank filed its December 18, 2012 complaint,
Beauvais’s master condominium association, Aqua Master Association, Inc.
(“Aqua”), had already foreclosed its previously recorded assessment lien, and had
become the title owner of the condominium unit. Aqua filed an answer to Deutsche
Bank’s complaint, asserting, as its sole affirmative defense, that the five-year
statute of limitations, prescribed in section 95.11(2)(c) of the Florida Statutes,
barred Deutsche Bank’s cause of action.
41
Specifically, Aqua asserted that more than five years had elapsed between
AHMS’s 2007 acceleration of the amounts due under Beauvais’s note and the
filing of Deutsche Bank’s December 2012 purported re-acceleration and
foreclosure lawsuit.
In December of 2013, Aqua filed a motion for summary judgment, seeking a
declaration that the note and mortgage were unenforceable due to the expiration of
the statute of limitations. The trial court granted Aqua’s summary judgment motion
and entered final summary judgment for Aqua. This appeal followed.
This Court’s panel opinion affirmed that portion of the trial court’s summary
judgment declaring that the expiration of the statute of limitations barred the
plaintiff’s foreclosure action, but reversed the trial court’s declaration cancelling
the mortgage. Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575 (Fla.
3d DCA Dec. 17, 2014). This Court granted en banc review, and the en banc
majority opinion reverses the trial court’s summary judgment. My dissent is
explained below.
III. Analysis
A. Synopsis of Majority Opinion’s Holding and My Dissent
The majority opinion concludes that the five-year statute of limitations for
foreclosure actions does not bar Deutsche Bank’s December 20, 2012 lawsuit,
“[b]ecause the installment nature of the loan at issue did not terminate following
42
acceleration and foreclosure and because dismissal of the foreclosure action
returned the parties to the status quo existing before acceleration . . . .” See
majority opinion at 19.
The majority opines that Singleton – which is a res judicata case and not a
statute of limitations case – stands for the proposition that a lender’s exercising its
option to accelerate does not affect the installment nature of a loan. In other words,
in the majority’s view, Singleton necessarily holds that, subsequent to a lender’s
acceleration, a borrower’s monthly installment payments continue to become due
monthly, and a borrower’s failure to make those post-acceleration monthly
payments constitute subsequent defaults. See majority opinion at 6, 12.
In a separate part of its opinion, the majority also (and, in my view,
inconsistently) holds that, under Singleton, any dismissal of a prior foreclosure
action automatically, and as a matter of law, places the parties into their pre-
acceleration positions (i.e., the status quo) and allows the lender to treat the note as
if the lender had never accelerated the note. See majority opinion at 13, 19, 30.15
In my view, despite the majority’s abundant number of citations to Singleton
v. Greymar Associates, the majority’s conclusions simply are not supported, much
less required, by Singleton. The majority’s conclusions are contrary to the express
15 The majority’s two principal conclusions are not only erroneous, they are also
irreconcilable with each other. If acceleration does not terminate the installment
nature of the loan, then dismissal is irrelevant because acceleration has not altered
the parties’ status quo in the first place.
43
terms of the parties’ note and mortgage, as well as the considerable body of Florida
law that has governed this State’s mortgage transactions for decades.
Specifically, the majority’s principal conclusions are untenable because
they: (i) contradict the express language of Singleton that only an adjudication that
denies acceleration and foreclosure reinstates the loan (Singleton, 882 So. 2d at
1007); (ii) effectively rewrite the parties’ contract documents, both by adding a
new reinstatement provision and by redefining acceleration; (iii) rewrite Florida
dismissal law, visiting upon a form dismissal order unprecedented adjudicatory
effect; (iv) effectively rewrite the statute of limitations defense in foreclosure
cases; and (v) conflate Florida’s statute of limitations with Florida’s statute of
repose in foreclosure cases.
B. Singleton v. Greymar Associates
(i) Summary of Singleton
In Singleton, the lender brought its first foreclosure action against the
borrower based on a September 1, 1999 default. Singleton, 882 So. 2d at 1005. The
trial court dismissed that first foreclosure action, with prejudice, as a sanction for
the failure of the lender to appear at a case management conference. Id.
The lender brought its second foreclosure action based on an April 1, 2000
default. The trial court rejected the borrower’s res judicata defense (that the
44
adjudication of the first foreclosure lawsuit forever barred the lender from suing on
the note and mortgage), and entered summary judgment for the lender. Id.
The borrower appealed, arguing that the trial court’s dismissal, with
prejudice, of the lender’s first case constituted res judicata of any subsequent
foreclosure case, and forever precluded the lender from suing the borrower on the
note and mortgage.
On appeal, the Fourth District Court of Appeal affirmed the trial court’s
summary judgment, Singleton v. Greymar Assocs., 840 So. 2d 356 (Fla. 4th DCA
2003), and the Florida Supreme Court upheld the district court’s affirmance.16 17
The Supreme Court determined that res judicata does not necessarily bar a
subsequent action based on a subsequent default. Singleton, 882 So. 2d at 1005.
The Supreme Court in Singleton held that the trial court’s adjudication of the
first action “merely bars a second action relitigating the same alleged default.” Id.
at 1007. The Court held: “While it is true that a foreclosure action and an
16The statute of limitations defense was not discussed in either the district court’s
or the Supreme Court’s Singleton opinion. In fact, based on the dates of the
opinions, it is apparent that, in Singleton, both the first and the second lawsuits
were brought well within five years of the September 1, 1999 default.
17 The Florida Supreme Court’s jurisdiction arose from a conflict between the
Fourth District Court of Appeal’s decision in Singleton and a Second District
Court of Appeal decision, Stadler v. Cherry Hill Developers, 150 So. 2d 468 (Fla.
2d DCA 1963). Stadler is also not a statute of limitations case. In fact, in Stadler
the court concluded that res judicata barred the mortgagee’s second lawsuit, filed a
mere thirteen months after the filing of the first lawsuit which was dismissed with
prejudice by the trial court.
45
acceleration of the balance due based upon the same default may bar a subsequent
action on that default, an acceleration and foreclosure predicated upon subsequent
and different defaults present a separate and distinct issue.” Id.
Critical to understanding Singleton’s precedential value to the instant case –
and how the majority opinion misinterprets same – is the following language from
Singleton whereby the Court provides an illustration of when res judicata would
not bar a second foreclosure case based on a subsequent default:
For example, a mortgagor may prevail in a foreclosure action by
demonstrating that she was not in default on the payments alleged to
be in default, or that the mortgagee had waived reliance on the
defaults. In those instances, the mortgagor and mortgagee are simply
placed back in the same contractual relationship with the same
continuing obligations. Hence, an adjudication denying acceleration
and foreclosure under those circumstances should not bar a
subsequent action a year later if the mortgagor ignores her obligations
on the mortgage and a valid default can be proven.
Id. (emphasis added)18
In other words, if the lender is unsuccessful in its foreclosure action –
resulting in an adjudication denying acceleration and foreclosure – the parties
are placed back into their same contractual relationship (that is, the installment
nature of the loan is reinstated) and the doctrine of res judicata will not preclude a
lender lawsuit based on a subsequent borrower non-payment default.19
18 In the Court’s illustration, the lender’s subsequent lawsuit is filed “a year later.”
Surely, had the Singleton Court intended to upend statute of limitations foreclosure
law – as does the majority’s interpretation of Singleton – the Court could have
employed a hypothetical implicating the five-year statute of limitations.
46
(ii) The majority’s construction of Singleton impermissibly rewrites the
parties’ contracts
The majority reads Singleton for the proposition that, despite a lender’s
acceleration, a borrower’s obligation to pay – and a lender’s obligation to accept –
monthly post-acceleration installment payments continues; that is, there can be
multiple, post-acceleration non-payment defaults, and multiple, post-acceleration
accelerations, on the same note.
Consequently, under the majority’s holding, when a borrower fails to make
one of these post-acceleration monthly installment payments, a subsequent default
19 This holding makes perfect sense in the context of res judicata law. If, for
example, a lender sues a borrower, accelerates, and alleges that a particular
payment was not paid, and the borrower is able to establish that the payment was
made, the res judicata effect of that adjudication for the borrower would bar the
lender from again suing on that alleged missed payment. Because that adjudication
denied the lender’s acceleration and foreclosure (and placed the parties back into
their contractual relationship), the res judicata doctrine would not preclude the
lender from suing the borrower for a later missed payment (a subsequent and
separate default).
Alternately, if, for example, the borrower successfully defends a foreclosure
action asserting he never signed the note or mortgage, or never received the loan
proceeds (that is, the parties never had a contractual relationship), the res judicata
effect of that adjudication – which obviously would not place the parties back into
any contractual relationship – would likely forever preclude the lender from again
suing that borrower on that note.
While, in both of these examples, the mortgagor prevailed in the litigation,
the resulting adjudications’ effect on the parties’ relationship is vastly different. By
simply concluding that all dismissals reinstate the installment nature of the loan,
the majority significantly distorts Singleton and discounts the dramatic variances
that can result from different dismissal orders.
47
has occurred, entitling the lender to accelerate again based on this subsequent
default.
Yet, nowhere does Singleton say this; and, most certainly, nowhere do the
parties’ contract documents say this.
(a) Installment nature of loan terminates upon lender acceleration
The plain language of the Beauvais promissory note and mortgage
establishes that, once the borrower defaults on a monthly payment and the lender
accelerates, the borrower is obligated to pay immediately all sums due under the
note.
The loan’s installment nature is clearly and unequivocally spelled out in
paragraph 3 of Beauvais’s note (captioned “PAYMENTS”), requiring Beauvais to
make monthly payments to retire his $1,440,000 indebtedness.
Paragraph 6 of the note (captioned, “BORROWER’S FAILURE TO PAY
AS REQUIRED”) expressly provides that if Beauvais defaults by failing to pay a
monthly installment payment, and does not pay the “overdue amount by a certain
date,” then “the Note Holder may require me to pay immediately the full
amount of Principal which has not been paid and all the interest that I owe on that
amount.” (emphasis added)
Paragraph 22 of the mortgage securing the note (captioned, “Acceleration;
Remedies.”) contains virtually identical acceleration language: “If the default is
48
not cured on or before the date specified in the notice, Lender at its option may
require immediate payment in full of all sums secured by this Security
Instrument without further demand and may foreclose this Security Instrument by
judicial proceeding.” (emphasis added)
Similarly, Paragraph 10 of the note (captioned “UNIFORM SECURED
NOTE”), describing the acceleration provisions of the mortgage securing the note
(the Security Instrument) reads, in relevant part, as follows: “That Security
Instrument describes how and under what conditions I may be required to make
immediate payment in full of all amounts I owe under this Note.” (emphasis
added)
As these documents clearly and unequivocally provide, once the lender
exercises its option to require the borrower to pay immediately all amounts due
under the note, the installment nature of the note terminates.
This construction of the parties’ contract documents is expressly reinforced
in the mortgage’s reinstatement provision (paragraph 19 of the mortgage
captioned, “Borrower’s Right to Reinstate After Acceleration.”). This post-
acceleration provision requires the lender to reinstate the installment nature of the
note – “as if no acceleration had occurred” – upon the defaulting borrower paying
to the lender specifically defined “reinstatement sums and expenses,” so long as
such payment occurs prior to the entry of any foreclosure judgment.20
49
Obviously, this reinstatement provision would be unnecessary and
meaningless if, as the majority concludes, Singleton requires the installment nature
of the note to continue after a lender accelerates. If, under Singleton, monthly
installment payments continue to become due after acceleration, what is being
“reinstated?”
Singleton should not be read in such a way as to render this reinstatement
provision meaningless. See Bethany Trace Owners’ Ass’n, Inc. v. Whispering
Lakes I, LLC, 155 So. 3d 1188, 1191 (Fla. 2d DCA 2014) (“When interpreting
contractual provisions, courts ‘will not interpret a contract in such a way as to
render provisions meaningless when there is a reasonable interpretation that does
not do so.’”) (citation omitted).
Plainly, per the parties’ contract documents, after acceleration the borrower
no longer enjoys the contractual right to repay the loan in monthly installments
because the lender has exercised its contractual right to require the borrower
immediately to repay the entire loan.
20 The mortgage’s reinstatement provision requires a borrower to exercise his post-
acceleration reinstatement right prior to the entry of a foreclosure judgment. To
the extent that the majority opinion somehow views acceleration as occurring only
upon entry of a foreclosure judgment for the lender, such an interpretation would
render this paragraph’s timing provisions meaningless. Indeed, if acceleration
occurs only upon judgment, and the borrower must exercise his reinstatement right
after acceleration, but before entry of the judgment, the borrower’s reinstatement
right would be illusory.
50
(b) Majority creates post-acceleration fiction and “new” reinstatement
provision
The majority’s court-imposed fiction that, after acceleration, subsequent
monthly installment payments somehow continue to become due is not only
contrary to the parties’ contract documents, it is simply fanciful.21 A borrower’s
monthly installment payment obligations and a lender’s acceleration after default
do not, and cannot, coexist.22
21The majority’s conclusion is also irreconcilable with decades of case law holding
that a loan acceleration – whether automatic or exercised at the option of the lender
– causes the entire indebtedness immediately to become due. Baader v. Walker,
153 So. 2d 51, 54 (Fla. 2d DCA 1963) (holding that lender’s agent authorized to
collect full amount of indebtedness after borrower’s default on installment
payment because note contained automatic acceleration provision); Cook v.
Merrifield, 335 So. 2d 297 (Fla. 1st DCA 1976) (holding that in the absence of
acceleration option, entire indebtedness became due upon borrower default as a
product of automatic acceleration provision); cf. Home Credit Co. v. E.B. Brown,
148 So. 2d 257, 260 (Fla. 1962) (finding note to be usurious because lender had
option to accelerate full amount of note plus interest; computation under usury law
based on lender’s contractual right to accelerate even if lender chooses not to
exercise full acceleration right). Nothing in this line of cases remotely suggests
that, after acceleration, monthly installment payments continue to become due
giving rise to successive accelerations. To tell a borrower that he owes everything
immediately, and also owes next month’s installment payment, makes little sense.
22 Oddly, the majority opinion cites to the non-waiver provisions of the note
(paragraph 6) and mortgage (paragraph 12) as somehow supporting the notion that
the installment nature of the note survives acceleration. See majority opinion at 15-
17. These provisions say just the opposite: if the mortgagee accepts payments
after acceleration, such acceptance shall not constitute a waiver of the mortgagee’s
rights.
The typical lender’s practice is to refuse to accept a borrower’s monthly
installment payments after the lender has exercised acceleration. If, as the majority
concludes, acceleration does not transform the installment nature of the note and
51
The majority opinion rewrites the parties’ note and mortgage to create a
reinstatement provision – i.e., reinstating the installment nature of the note, as if
acceleration never occurred, upon any dismissal of any lawsuit – that the parties
did not include when drafting their documents. Singleton does not say this; the
parties’ contract documents certainly do not say this; and Florida law is repugnant
to the majority’s insertion of a provision into the parties’ private contract that the
parties themselves most assuredly omitted.23
(iii) The majority’s construction of Singleton jettisons Singleton’s express
presupposition that an adjudication denying acceleration is required for any
“subsequent and separate alleged default” to exist
In order for an adjudication to place the parties “back in the same contractual
relationship with the same continuing obligations,” so that subsequent non-
payment defaults would exist, Singleton insists upon “an adjudication denying
acceleration and foreclosure.”24
Yet, according to the majority opinion, after any dismissal of a foreclosure
action, the parties are returned to their pre-acceleration positions. See majority
advance the note’s maturity date to the date of acceleration, not only would this
non-waiver provision be entirely unnecessary, but a lender’s refusal to accept post-
acceleration installment payments could constitute a lender breach.
23Brooks v. Green, 993 So. 2d 58, 61 (Fla. 1st DCA 2008) (holding that a court is
without authority to rewrite a clear and unambiguous contract between parties).
24 Singleton, 882 So. 2d at 1007.
52
opinion at 16. Then, unburdened by Florida’s statute of limitations, the lender is
free to: (i) treat its prior acceleration as a nullity, (ii) pick another month as the
“new” default date,25 and (iii) bring a new foreclosure action at any time seeking
the identical sums sought in the dismissed lawsuit.
Again though, Singleton does not say this. Explicit in Singleton is that, in
order to reinstate the parties’ previous contractual relationship so that subsequent
defaults may occur, the trial court’s adjudication of the first foreclosure action
must deny the lender’s acceleration. Singleton, 882 So. 2d at 1007. Otherwise,
without such an adjudication denying acceleration, the lender’s affirmative,
contractually prescribed acceleration remains unaffected.
The majority’s overbroad construction of Singleton not only undermines this
crucial aspect of Singleton, but also, as more particularly described in section
III.C.(i), below, visits unprecedented adjudicatory effect upon a form dismissal
order.
C. The Majority Opinion Subverts Dismissal Law and Statute of Limitations
Jurisprudence in Foreclosure Cases
As I describe in the three subsections below, the majority’s interpretation of
Singleton fundamentally alters, in a foreclosure setting, both Florida dismissal law
25 According to the majority opinion, the “new” default date alleged in the second
lawsuit must be within five years of the filing of the second lawsuit.
53
and statute of limitations jurisprudence in profound, and certainly unintended,
ways.
(i) The majority opinion visits upon a form dismissal order an array of
inferred adjudications
The trial court’s December 6, 2010 case management conference dismissal
order – a form order – states: “The Plaintiff failed to appear without explanation.
Therefore, this case is dismissed without prejudice.”
According to the majority, this simple form dismissal order, by operation of
law, and without a scintilla of record support evidencing any such intention by the
trial court: (i) nullified the lender’s January 22, 2007 acceleration;26 (ii) reinstated
the installment nature of the loan; (iii) placed the parties back into their pre-
acceleration positions, allowing Beauvais to make, and requiring Deutsche Bank to
accept, monthly installment payments; and (iv) reset the note’s maturity date to
March 1, 2036.
Yet the trial court’s form dismissal order adjudicated nothing. It simply
dismissed the plaintiff’s action, requiring the plaintiff to file a new lawsuit if the
plaintiff wished to proceed with the action.
26 The majority’s implicit, entirely court-created conclusion that the trial court’s
form dismissal order affects – much less nullifies – AHMS’s acceleration is
nothing short of remarkable. At no time in the case below, or on appeal, has any
party challenged the effectiveness of AHMS’s January 22, 2007 acceleration of
Beauvais’s note.
54
Indeed, the dismissal was without prejudice so it would not have had res
judicata effect even if Deutsche Bank’s second foreclosure lawsuit were to have
alleged the exact same breach. Markow v. Am. Bay Colony, Inc., 478 So. 2d 413
(Fla. 3d DCA 1986). It certainly was not an “adjudication denying acceleration and
foreclosure” so as to place the parties back into their prior contractual provisions,
as expressly contemplated by Singleton.
To illustrate the significant problem with the majority’s conclusion in this
regard, assume the following scenario: after the trial court announces the dismissal
of the lender’s foreclosure case for failure to attend the trial, the borrower’s
counsel requests the trial court to enter an ex parte order nullifying the lender’s
prior acceleration and reinstating the installment nature of the borrower’s loan.
The trial court reviews the mortgage’s detailed reinstatement provision
(paragraph 19), and asks the borrower’s counsel whether the borrower has cured all
defaults and paid the lender all expenses, as is expressly required for a borrower to
reinstate a loan. The borrower’s counsel responds that the borrower has paid
nothing to the lender in years and still owes tens, if not hundreds, of thousands of
dollars to the lender.
Armed with this information, the trial court then grants the borrower’s
motion, nullifies acceleration and reinstates the installment nature of the loan.
Clearly, no trial judge would ever enter such an order and, in the unlikely event
55
such an order were entered, presumably it would be dead on arrival in any
appellate court.
Yet the majority opinion’s conclusion that the trial court’s form dismissal
order nullified the prior acceleration and reinstated Beauvais’s loan does precisely
what no trial judge would ever do. In my view, this conclusion turns procedural
fairness on its head by giving the sanctioned party (the lender) the after-the-fact
benefit of reinstatement: a remedy that the prevailing party (the borrower) never
would receive.
In my view, the majority traverses a dangerously slippery slope. We should
be reluctant to hold that a trial court’s form dismissal order visits upon the
borrower and lender a host of critical, yet unarticulated, adjudications that
fundamentally change the parties’ contractual relationship and are entirely
unsupported by the existing law or by the record below.
(ii) The majority opinion effectively rewrites the statute of limitations in
foreclosure cases
The majority opinion states: “under Singleton, dismissal of a foreclosure
action accelerating payment on one default does not bar a subsequent foreclosure
action accelerating payment on a later default if the subsequent default occurred
within five years of the subsequent action and acceleration.” See majority opinion
56
at 29 (paragraph 2). The majority supports this notion with citation to several,
recent cases. See majority opinion at 12-13.
These cases implicitly hold what no Florida court, and certainly not the
Singleton court, has ever explicitly held before: that payment default and not
acceleration constitute the last element of a foreclosure cause of action. Despite the
majority’s characterization otherwise, this holding marks an upheaval of well-
established Florida law.
In a foreclosure case such as this one, where the lender has exercised its
contractual right to accelerate, the last element of the cause of action – triggering
the running of the five-year statute of limitations – is the lender’s affirmative act of
acceleration, not the borrower’s missed payment. Monte v. Tipton, 612 So. 2d at
716 (declaring that the statute of limitations begins to run upon notice of
acceleration, while noting that the initial payment default occurred more than
fifteen years prior to the notice of acceleration); see also Penagos v. Capital Bank,
766 So. 2d 1089 (Fla. 3d DCA 2000).27
Recognizing that the lender’s notice of acceleration, and not the borrower’s
payment default, triggers the statute of limitations, the note and mortgage in this
27 Presumably, if the lender’s action sought only recoupment of missed payments,
rather than the accelerated amount of the loan, then the borrower’s default would
constitute the last element of the cause of action. In this case, however, as a
practical matter, lenders exercise their right to accelerate immediately prior to, or
contemporaneously with, their foreclosure action. In such a case, the date of the
borrower’s default is irrelevant to the statute of limitations inquiry.
57
case expressly reflect that the lender’s forbearance in exercising its right to
accelerate does not constitute a waiver of its right to accelerate later.28 Requiring
lender acceleration and the filing of the lender’s foreclosure action to occur within
five years of a default eviscerates these express contract provisions.29
Finally, the majority states: “We . . . conclude that dismissal of a foreclosure
action accelerating payment on one default does not bar a subsequent foreclosure
action on a later default if the subsequent default occurred within five years of
the subsequent action.” See majority opinion at 12. Yet the majority fails to
explain how its conclusion would require reversal in this case. In this case, the
lender’s subsequent action was brought on December 18, 2012, which alleged that
the subsequent default had occurred on October 1, 2006. Even assuming that both
the majority’s rewrite of the statute of limitations and the parties’ contract correctly
express the state of the law (which, in my view, it does not), plainly Deutsche
28 Paragraph 6(D) of the note reads, in its entirety, as follows: “No Waiver By
Note Holder . . . Even if, at a time when I am in default, the Note Holder does not
require me to pay immediately in full as described above, the Note Holder will still
have the right to do so if I am in default at a later time.” Similarly, paragraph 12 of
the mortgage reads, in relevant part, as follows: “Any forbearance by Lender in
exercising any right or remedy . . . shall not be a waiver of or preclude the exercise
of any right or remedy.”
29 It appears that the majority might have confused a lender’s forbearance of a
contractual right with a lender’s exercise of a contractual right. See majority
opinion at 29 (paragraph 1). In this case, the lender did not forbear (or waive) the
exercise of its contractual right to accelerate; the lender affirmatively exercised its
contractual right to accelerate on January 22, 2007.
58
Bank’s subsequent action was not brought within five years of the alleged
subsequent default.
(iii) The majority opinion conflates the statute of repose with the statute of
limitations
The practical effect of the majority’s opinion is to conflate the statute of
repose for foreclosure actions (section 95.281 of the Florida Statutes) with the
statute of limitations for foreclosure actions.30
Under the majority’s opinion, the only time a statute of limitations defense
conceivably could be effective is when a lender tries to bring a foreclosure action
more than five years after the maturity date expressed on the face of the note and
mortgage. Yet, this is precisely what the legislature has already done by enacting
section 95.281(1)(a), the statute of repose for foreclosure actions.
30 A cause of action accrues, and the statute of limitations begins to run, when the
last element of the cause of action occurs. § 95.031(1), Fla. Stat. (2014). A statute
of repose operates to set a time limit on a cause of action when the last element of
the cause of action occurs beyond the repose statute’s outside date. Am. Bankers
Life Assurance Co. of Fla. v. 2275 West Corp., 905 So. 2d 189 (Fla. 3d DCA
2005. In a foreclosure action, the statute of limitations precludes an action to
collect the debt if the action is brought more than five years from lender
acceleration; while the statute of repose “establishes an ultimate date when the lien
of the mortgage terminates and is no longer enforceable.” Houck Corp. v. New
River, Ltd., Pasco, 900 So. 2d 601 (Fla. 2d DCA 2005). In this case, because the
maturity date is evident from the face of the mortgage (March 1, 2036), section
95.281(1)(a) sets this “ultimate” date as March 1, 2041.
59
This provision reads, in relevant part, as follows: “(1) The lien of a
mortgage . . . shall terminate . . . 5 years after the date of maturity.” §
95.281(1)(a), Fla. Stat. (2013).
If it had been the intent of the legislature to render acceleration meaningless,
so that the statute of limitations and the statute of repose for foreclosure actions
were identical, the statute of repose would have been unnecessary. In other words,
by allowing the lender’s acceleration and potential re-accelerations to keep
delaying the operation of the statute of limitations, the majority establishes the
note’s maturity date as the only date that can trigger application of the five-year
statute of limitations. The statute of limitations and the statute of repose, absurdly,
would shake hands on March 1, 2041.
IV. Singleton Distinguished and Harmonized
A. Singleton’s Equitable Considerations Are Irrelevant to this Court’s
Statute of Limitations Inquiry
Because Singleton is a res judicata case and not a statute of limitations case,
equitable principles expressly underpin Singleton’s holding. Id. at 1007-08.31 In
31Aeacus Real Estate Ltd. P’ship v. 5th Ave. Real Estate Dev., Inc., 948 So. 2d
834, 836 (Fla. 4th DCA 2007) (observing that res judicata is an equitable
doctrine). Res judicata is a judicially-created principle, rooted in equity, and “will
not be invoked where it would defeat the ends of justice.” State v. McBride, 848
So. 2d 287, 291 (Fla. 2003).
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fact, it was upon this very foundation that the Florida Supreme Court rested its
decision in Singleton:
We must also remember that foreclosure is an equitable remedy and
there may be some tension between a court’s authority to adjudicate
the equities and the legal doctrine of res judicata. The ends of justice
require that the doctrine of res judicata not be applied so strictly so as
to prevent mortgagees from being able to challenge multiple defaults
on a mortgage. See deCancino v. E. Airlines, Inc., 283 So. 2d 97, 98
(Fla. 1973) (“[T]he doctrine [of res judicata] will not be invoked
where it will work an injustice. . . .”).
Singleton, 882 So. 2d at 1008 (alteration in original).
By contrast, statutes of limitations are “fixed limitations on actions. . .
predicated on public policy and are a product of modern legislative, rather than
judicial processes.” Major League Baseball v. Morsani, 790 So. 2d 1071, 1074
(Fla. 2001).
Equitable considerations, while relevant to the Supreme Court’s res judicata
analysis in Singleton, are entirely irrelevant to cases (such as this) involving the
application of a statute of limitations.32 Proper application of a statute of
32 In fact, section 95.051(1)(f) of the Florida Statutes expressly provides that only
“[t]he payment of any part of the principal or interest of any obligation or liability
founded on a written instrument” tolls the five-year statute of limitations. Section
95.051(2) limits statute of limitations tolling to the reasons specified in section
95.051(1)(a)-(i). HCA Health Servs. of Fla., Inc. v. Hillman, 906 So. 2d 1094,
1100-01 (Fla. 2d DCA 2004) (providing that the legislature’s enactment of section
95.051 establishes exclusive list of conditions that can toll a statute of limitations,
effectively eliminating the concept of “equitable tolling”). The majority’s
sweeping interpretation of Singleton – holding that a borrower’s installment
payments continue after acceleration – disregards section 95.051(1)(f) altogether.
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limitations may by its very nature mean a plaintiff is barred from maintaining a suit
that is otherwise meritorious. Nevertheless, the statute of limitations is the province
of the legislative branch, and this Court’s equitable powers (which may be
exercised appropriately in the res judicata context) have no place in a statute of
limitations analysis. As the Florida Supreme Court held more than eighty years
ago:
Statutes should, when reasonably possible, be so construed as not to
conflict with the Constitution or with long and well settled legal
principles, but the language of this statute, considering it as a whole,
cannot be given its apparent meaning and purpose without upsetting to
some extent the principle of res judicata, and thus creating a
somewhat anomalous situation, which will in some cases require a
circuit judge to grant to a party a judgment at law on a cause of action,
which, sitting as chancellor in a court of equity, he had already held
such party was not, in equity and good conscience, entitled to enforce.
Cragin v. Ocean & Lake Realty Co., 133 So. 569, 573-74 (Fla. 1931); see also
Dobbs v. Sea Isle Hotel, 56 So. 2d 341, 342 (Fla. 1952) (holding that courts must
presume that the legislature, in establishing a statute of limitations, “thoroughly
considered and purposely preempted the field of exceptions to, and possible
reasons for tolling, the statute. We cannot write into the law any other exception,
nor can we create by judicial fiat a reason or reasons, for tolling the statute since
the legislature dealt with such topic and thereby foreclosed judicial enlargement
thereof.”).
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Yet it seems that equitable considerations – rather than any explicit
pronouncement in Singleton – fuel the majority opinion’s sweeping construction of
Singleton to the detriment of well-established precedent.
Regrettably, the lure of equity diverts the majority from a proper
distinguishing of Singleton, and causes the majority effectively to overrule cases
that Singleton does not mention, much less disrupt. Examples abound.
B. What Singleton Does Not Do
Singleton does not overrule Conner v. Coggins, 349 So. 2d 780 (Fla. 1st
DCA 1977), Locke v. State Farm Fire & Casualty Co., 509 So. 2d 1375 (Fla. 1st
DCA 1987), or Monte v. Tipton, 612 So. 2d 714 (Fla. 2d DCA 1993). Singleton
does not stand for the proposition that a lender’s acceleration is irrelevant to the
calculation of the statute of limitations.
Singleton does not overrule Erwin v. Crandall, 175 So. 862 (Fla. 1937),
Casino Espanol de la Habana, Inc. v. Bussel, 566 So. 2d 1313, 1314 (Fla. 3d DCA
1990), or Greene v. Bursey, 733 So. 2d 1111, 1114-15 (Fla. 4th DCA 1999)
(holding that entire debt becomes due, and loan’s maturity date is advanced, when
the creditor takes affirmative action to alert the debtor that creditor has exercised
option to accelerate). Singleton does not stand for the proposition that a lender’s
acceleration does not advance the note’s maturity date.
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Singleton does not overrule Baader v. Walker, 153 So. 2d 51 (Fla. 2nd DCA
1963), or Cook v. Merrifield, 335 So. 2d 297 (Fla. 1st DCA 1976). Singleton does
not stand for the proposition that, despite a lender’s acceleration, a mortgagor’s
obligation to pay – and a mortgagee’s corresponding obligation to accept –
monthly installment payments continue.
Yet, relying on Singleton, the majority opinion makes each of these
significant, unsupported leaps, as if Singleton, sub silentio, overturned decades of
jurisprudence.33
C. Harmonizing Singleton; Employing an Inquiry Consistent with Precedent
In my view, it is incumbent upon the district courts to apply Florida
Supreme Court precedent in such a way as not to produce a wholesale upheaval of
well-established law. A far more restrained reading of Singleton – in harmony, and
not at odds, with Florida case law regarding lender acceleration and the statute of
limitations – is more compatible with a district court’s place in Florida’s court
hierarchy.
Thus, consistent with Singleton and decades of Florida statute of limitations
case law, I suggest that the following inquiry be employed when, as in the instant
case, both the first foreclosure action’s dismissal order and the parties’ contract
documents are silent as to whether the dismissal has effected reinstatement: the
33 Puryear v. State, 810 So. 2d 901, 905 (Fla. 2002) (“We take this opportunity to
expressly state that this Court does not intentionally overrule itself sub silentio.”).
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court must consider relevant and highly probative, contemporaneous and post-
dismissal factors to determine whether the prior case’s adjudication actually
reinstated the installment nature of the loan. Such factors include: (i) whether the
lender’s internal records treated the loan as being reinstated; (ii) how the lender
characterized the loan for reporting purposes to any regulator; (iii) if, when, and
how the lender communicated reinstatement to the borrower; (iv) how the lender
treated any post-dismissal installment payments tendered by the borrower; and (v)
the nature of any other post-dismissal communications between the lender and
borrower.34
In the instant case, the record is devoid of any evidence indicating that, at
any time contemporaneous with the December 6, 2010 dismissal, either party
treated the trial court’s form dismissal order as a reinstatement of the installment
nature of the loan.35 In sum, after the dismissal of the first case in 2010, the parties
34 I recognize that the inquiry I suggest here is more nuanced than the inquiry
suggested by the panel opinion with which I concurred. The panel opinion
suggested a more formulaic approach to determining whether dismissal of the prior
action reinstated the installment nature of the loan, i.e., a dismissal without
prejudice does not reinstate the loan, while a dismissal with prejudice does
reinstate the loan. Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575
(Fla. 3d DCA Dec. 17, 2014). This reflected a thoughtful attempt to distinguish
Singleton’s equity-based res judicata analysis and to avoid an extension of
Singleton to the case at bar; however, I am left with little choice but to expound
fully upon the inapplicability of Singleton in this context.
35My approach is hardly novel. In order to avoid summary judgment on a statute
of limitations defense, New York’s appellate courts – certainly not outliers in the
mortgage foreclosure arena – require an affirmative revocation of a lender
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did not reinstate the installment nature of the loan; the contract documents did not
reinstate the installment nature of the loan; and the trial court did not reinstate the
installment nature of the loan. Why should we?
V. Conclusion
I am not unmindful of the moral imperative driving both the majority’s
opinion and a host of other State appellate court and federal decisions: borrowers
should pay their mortgage obligations. The expiration of a statute of limitations,
however, generally results in a windfall for the escaping defendant. In my view,
neither the moral imperative that borrowers pay their obligations, nor Singleton,
has abrogated decades of Florida jurisprudence governing the statute of limitations
in foreclosure cases. I would affirm that part of the trial court’s final judgment
holding that the statute of limitations precludes Deutsche Bank’s foreclosure
action.
SHEPHERD, SALTER and EMAS, JJ., concur.
acceleration prior to the expiration of the statute of limitations. See e.g. EMC
Mortg. Corp. v. Patella, 720 N.Y.S.2d 161 (N.Y. App. Div. 2001).
66