Ocwen Loan Servicing, LLC v. Jean Marie Delvar a/k/a Jean Delvar

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
OCWEN LOAN SERVICING, LLC,
Appellant,
v.
JEAN MARIE DELVAR a/k/a JEAN DELVAR, et al.,
Appellees.
No. 4D14-763
[December 9, 2015]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Howard H. Harrison, Senior Judge; L.T. Case No. 502008
CA012303.
Marc James Ayers of Bradley Arant Boult Cummings LLP,
Birmingham, AL, for appellant.
Kendrick Almaguer and Thomas Eross, Jr., of The Ticktin Law Group,
P.A., Deerfield Beach, for appellees.
KLINGENSMITH, J.
Ocwen Loan Servicing, LLC (“appellant”) appeals the trial court’s final
judgment in favor of Jean Marie Delvar a/k/a Jean Delvar, et al.
(“appellee”), in which the trial court found that there had been an
enforceable oral modification of the mortgage. Appellant argues that the
trial court erred by ruling that the mortgage had been orally modified
and by rewriting the terms of the mortgage to reflect the modification.
Specifically, appellant claims that the mortgage could have been modified
only by a written agreement because it is an agreement within the ambit
of the Statute of Frauds and that the trial court incorrectly ruled the oral
modification was enforceable based upon application of the doctrine of
promissory estoppel. For the reasons stated below, we hold the trial
court’s finding that the mortgage was orally modified violates section
725.01, Florida Statutes (2013).1 We also agree that the trial court
1 It appears that there are at least two Statutes of Frauds in effect in Florida:
section 687.0304, Florida Statutes (2013), which has been referred to by courts
erroneously applied the doctrine of promissory estoppel. Accordingly, we
reverse.
GMAC Mortgage, LLC (“GMAC”) commenced the proceedings below by
filing an initial complaint of foreclosure against appellee in April 2008.
In his answer and affirmative defenses, appellee claimed in part that
GMAC’s loss mitigation department had “represented to [appellee] that
[he] did not have to make monthly payments while [the bank] worked on
modifying their Note and Mortgage to make it more affordable . . . and
thereby avoid foreclosure.” Appellee argued that as a result of this
promise, GMAC was estopped from pursuing foreclosure in light of its
“material representations” to appellee that he was eligible for a loan
modification. After appellant was substituted into this action as plaintiff,
the parties proceeded to a non-jury trial.
During the trial, appellant called Peter Knapp (“Knapp”), a senior
litigation analyst employed by appellant, to testify. Knapp testified that
appellant had offered a loan modification to appellee, but that it was
never signed or returned. He also stated that appellee had made a series
of payments of $2,000 per month in May, June, July, August, and
September of 2008 pursuant to a forbearance agreement with appellant,
but all of this money had been refunded to appellee prior to trial.
Appellee claimed that after the foreclosure action had been filed, he
was offered a loan modification during a telephone conversation with a
representative from GMAC, who told him that foreclosure proceedings
would be halted if he made a payment of $6,200 and then continued to
make recurring payments of $2,000 per month. He testified that even
though he made these payments, GMAC continued to pursue
foreclosure. Appellee also disputed that he was ever refunded the
money. On cross-examination, appellee admitted that he had never
as Florida’s Banking Statute of Frauds, see, e.g., Bloch v. Wells Fargo Home
Mortg., 755 F.3d 886, 889-90 (11th Cir. 2014); Congress Park Office Condos II,
LLC v. First-Citizens Bank & Trust Co., 105 So. 3d 602, 608 n.5 (Fla. 4th DCA
2013), and section 725.01. However, appellant argued below only that the oral
modification was invalid under section 725.01. Therefore, we confine our
opinion to a discussion of that statute only. Sunset Harbour Condo. Ass’n v.
Robbins, 914 So. 2d 925, 928 (Fla. 2005) (“‘In order to be preserved for further
review by a higher court, an issue must be presented to the lower court and the
specific legal argument or ground to be argued on appeal or review must be part
of that presentation if it is to be considered preserved.’” (quoting Tillman v.
State, 471 So. 2d 32, 35 (Fla. 1985))).
2
executed a written loan modification, but argued that he had never
received any documents to sign in the first place.
The trial court rendered final judgment in favor of appellee and
included a provision within the judgment that “[t]he Note secured by the
Mortgage and the Mortgage [were] deemed unenforceable.” Appellant
filed a motion to vacate that final judgment, arguing that the trial court
had ruled in favor of appellant on every issue at trial save the mortgage
modification, and asserting that the mortgage could not have been
modified because any alleged agreement between appellee and the bank
was oral. Appellant maintained that because the mortgage agreement
was within Florida’s Statute of Frauds as a contract not to be performed
within one year, any subsequent agreement altering its terms had to be
in writing as well to be effective.
The trial court concluded that the evidence supported appellee’s claim
that a modification had been offered, and that he had acted in response
to it by making payments to the bank, even though the modification was
not in writing.2 Although the court agreed with appellant that the
mortgage was within the Statute of Frauds because it was an agreement
not intended to be performed within one year, the court thought the case
represented a “special circumstance.” Consequently, he determined that
the mortgage had been properly modified by an oral agreement and any
default was cured by the modification.
Later, the court issued a second final judgment of foreclosure in favor
of appellee, which provided that the original note and mortgage had been
orally modified, and reformed the terms to obligate appellee to make
payments of $2,000 per month, beginning on March 1, 2014. This
appeal followed.
Whether or not an oral agreement is enforceable “under the Statute of
Frauds is a pure question of law, which we review de novo.” DK Arena,
Inc. v. EB Acquisitions I, LLC, 112 So. 3d 85, 91 (Fla. 2013).
2 The evidence which the trial court considered in determining that an oral
modification had been offered included: 1) appellee’s testimony that a
representative of the bank had offered a modification over the phone;
2) payments appellee made in 2008 were in accordance with the new
agreement; 3) Knapp’s testimony that a written modification had been offered
(but never executed); and 4) the refunded 2008 payments were made pursuant
to a forbearance agreement between the parties. There was no documentation
presented at trial proving the existence of a written and executed forbearance
agreement.
3
Section 725.01 states, in pertinent part:
No action shall be brought . . . upon any agreement that is
not to be performed within the space of 1 year from the
making thereof . . . unless the agreement or promise upon
which such action shall be brought, or some note or
memorandum thereof shall be in writing and signed by the
party to be charged therewith or by some other person by
her or him thereunto lawfully authorized.
§ 725.01, Fla. Stat. (2013).
We have held that “to be within, and thus barred by, the provision in
the statute of frauds concerning agreements ‘not to be performed within
the space of one year from the making thereof,’ it must be shown that
neither party’s performance was intended to be complete within one
year.” Lundstrom Realty Advisors, Inc. v. Schickedanz Bros.-Riviera Ltd.,
856 So. 2d 1117, 1122 (Fla. 4th DCA 2003) (quoting Fla. Pottery Stores of
Panama City, Inc. v. Am Nat’l Bank, 578 So. 2d 801, 804 (Fla. 1st DCA
1991)); see also Dwight v. Tobin, 947 F.2d 455, 459 (11th Cir. 1991)
(stating that “[u]nder well-settled Florida law, the statute of frauds bars
the enforcement of a contract when the parties intended and
contemplated that performance of the agreement would take longer than
one year. . . . The intent of the parties may be inferred from the
‘surrounding circumstances’ or the ‘object to be accomplished.’” (quoting
Yates v. Ball, 181 So. 341, 344 (Fla. 1937)); Steinberg v. Kearns, 907 So.
2d 691, 693 (Fla. 4th DCA 2005) (stating that “‘[t]he rule is generally
approved in this country that the statute of frauds applies only to
contracts not to be performed on either side within the year, and has no
application to contracts which by intent were fully performed within the
year on one side.’” (alteration in original) (quoting Yates, 181 So. at 345)).
In the instant case, it is apparent from the terms of the mortgage and
the note that neither party intended for appellee to repay the loan within
one year of the signing of the agreements. The mortgage states, in
pertinent part:
(E) “Note” means the promissory note signed by Borrower
and dated JANUARY 20TH, 2006. The Note states that
Borrower owes Lender THREE HUNDRED SEVENTY FIVE
THOUSAND TWO HUNDRED FIFTY AND NO/100 Dollars
(U.S. $375,250.00) plus interest. Borrower has promised to
4
pay this debt in regular Periodic Payments and to pay the
debt in full not later than FEBRUARY 1ST, 2036.
(Emphasis added). Additionally, the note states:
3. PAYMENTS
(A) Time and Place of Payments
I will pay principal and interest by making a payment
every month.
I will make my monthly payment on the FIRST day of
each month beginning on MARCH 1st, 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 will be applied to
interest before Principal. If, on FEBRUARY 1st, 2036, I still
owe amounts under this Note, I will pay those amounts in full
on that date, which is called the “Maturity Date.”
(Emphasis added).
These terms reflect that the parties intended the loan to be repaid in
regular monthly payments over the course of thirty years, not within one
year. As such, the mortgage agreement is within the Statute of Frauds
and was required to be in writing. Because, “[u]nder the Statute of
Frauds, any modification to [a] contract [is] unenforceable unless
memorialized in a written document signed by the parties or their
authorized representatives,” DK Arena, Inc., 112 So. 3d at 97, the final
judgment in this case cannot stand.
Here, appellant asserts that the trial court improperly found that the
oral modification of the mortgage was enforceable based upon the
doctrine of promissory estoppel. We agree. Promissory estoppel “applies
when there is (1) a promise which the promisor should reasonably expect
to induce action or forbearance, (2) action or forbearance in reliance on
the promise, and (3) injustice resulting if the promise is not enforced.”
DK Arena, Inc., 112 So. 3d at 96. The Florida Supreme Court has
expressly stated that the Statute of Frauds cannot be circumvented by
application of the doctrine of promissory estoppel. Id. at 97
(“[A]pplication of the Statute of Frauds is a matter of legislative
prerogative; the judicial doctrine of promissory estoppel may not be used
to circumvent its requirements.” (citing Tanenbaum v. Biscayne
Osteopathic Hosp., Inc., 190 So. 2d 777, 779 (Fla. 1966))). Although the
5
trial court did not expressly state that it found the oral modification to be
enforceable based upon the doctrine, the transcript of the proceedings
supports the inescapable conclusion that promissory estoppel was the
basis for its decision.
We find that the trial court erred by ruling that the oral modification
was enforceable, and by applying the doctrine of promissory estoppel in
reforming the original note and mortgage to reflect the terms of that oral
agreement. Therefore, we reverse the provisions of the final judgment
that ordered a modification of the note and mortgage to conform to the
terms of the purported oral agreement.
Reversed and Remanded for further proceedings consistent with this
opinion.
WARNER and LEVINE, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
6