Alicia Vogel and Howard Vogel v. Wells Fargo Bank, N.A.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
ALICIA VOGEL and HOWARD VOGEL,
Appellants,
v.
WELLS FARGO BANK, N.A., et al.,
Appellees.
No. 4D15-132
[June 8, 2016]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Howard H. Harrison, Senior Judge; L.T. Case No. 2012CA
010116(AW).
Brian Korte and Scott J. Wortman of Korte & Wortman, P.A., West
Palm Beach, for appellants.
Sara F. Holladay-Tobias, Emily Y. Rottmann and Gabriel M. Hartsell
of McGuireWoods LLP, Jacksonville, for appellee Wells Fargo Bank.
KLINGENSMITH, J.
Alicia and Howard Vogel (“appellants”) appeal the trial court’s final
judgment of foreclosure in favor of Wells Fargo Bank, N.A (“appellee”).
They claim that the trial court erred by ruling that appellee had standing
to foreclose when the complaint was filed. Our review of the record
shows that there was insufficient evidence to establish that appellee
owned or possessed the note when this action was commenced.
Accordingly, the trial court’s judgment of foreclosure must be reversed.
Alicia Vogel executed a promissory note in 2004 with lender World
Savings Bank, FSB. That same day both appellants executed a mortgage
agreement with World Savings which encumbered their property. In
2006, World Savings’ parent company merged with Wachovia
Corporation, and the successor company later became known as
Wachovia Mortgage, FSB in 2007. In 2009, Wachovia Mortgage changed
its name to Wells Fargo Bank Southwest, National Association, and on
the same day, merged with and into appellee to become one corporate
entity. As a result of these dealings, appellee acquired ownership of the
assets and liabilities of World Savings by operation of law, including their
mortgages and notes.
Alicia Vogel eventually defaulted on her payment obligations under
the note, leading appellee to file its initial complaint alleging one count of
foreclosure. Appellee asserted that while Federal National Mortgage
Association (“Fannie Mae”) owned the note and mortgage, it had
authorized appellee to pursue the foreclosure action as the servicer of the
mortgage and the holder of the note.
Along with documents evidencing the various bank mergers, appellee
also attached to the initial complaint a copy of the mortgage and a copy
of the note, which did not contain any endorsements. When the case
proceeded to trial, appellee introduced evidence purporting to show that
the original loan documents were sent to its attorney before the
complaint was filed in order to pursue the foreclosure action. The parties
also stipulated to entering the original note and mortgage into evidence.
During cross examination of appellee’s vice president of loan
documentation, it became apparent that there were two endorsements on
the back of the last page of the original note that had previously been
admitted into evidence: a special endorsement from World Savings to
Fannie Mae, and a blank endorsement. Neither endorsement was dated,
and the special endorsement to Fannie Mae had been cancelled. The
witness could not testify as to when either endorsement was placed on
the original note, or when the special endorsement was cancelled.
However, he did state that appellee (as a result of the mergers) had been
the only entity to service the loan and possess the loan documents.
Appellants moved for involuntary dismissal, claiming that appellee
failed to prove its standing to foreclose via the mergers because there was
no evidence of when the blank endorsement was placed on the back of
the note. Appellee argued that it proved the note was in its possession
prior to the filing of the initial complaint because: 1) it provided evidence
that the original note had been sent to its attorney before the complaint
was filed; 2) it had essentially been the only party to ever hold the note,
since the original lender had eventually merged with it; and 3) because it
was in possession of the original note bearing the blank endorsement.
Appellants’ motion was denied, and the trial court eventually rendered
final judgment of foreclosure in favor of appellee.
The appropriate standard of review for whether a party has standing
to bring an action is de novo. Boyd v. Wells Fargo Bank, N.A., 143 So. 3d
1128, 1129 (Fla. 4th DCA 2014). “When a mortgage foreclosure case
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proceeds to a bench trial, the plaintiff bank need only present competent,
substantial evidence that it has standing to foreclose.” Fiorito v. JP
Morgan Chase Bank, Nat’l Ass’n, 174 So. 3d 519, 521 (Fla. 4th DCA
2015).
We have recently stated that:
In a foreclosure action, a “‘plaintiff must prove that it had
standing to foreclose when the complaint was filed.’” Vidal v.
Liquidation Props., Inc., 104 So. 3d 1274, 1276 (Fla. 4th DCA
2013) (quoting McLean v. JP Morgan Chase Bank Nat’l Ass’n,
79 So. 3d 170, 173 (Fla. 4th DCA 2012)). A party must
prove it has “standing to bring a mortgage foreclosure
complaint by establishing an assignment or equitable
transfer of the note and mortgage prior to instituting the
complaint.” Joseph v. BAC Home Loans Servicing, LP, 155
So. 3d 444, 446 (Fla. 4th DCA 2015) (citing McLean, 79 So.
3d at 173).
For a plaintiff to qualify as a holder of a promissory note,
the note must either list the plaintiff as the payee, or it
“must bear a special endorsement in favor of the plaintiff or
a blank endorsement.” McLean, 79 So. 3d at 173. Where a
promissory note filed after the initial complaint does not
include the date upon which the endorsement was made, the
plaintiff must provide “record evidence proving that it had
the right to enforce the note on the date the complaint was
filed.” See id. This evidence may be supplied by witness
testimony at trial. Lamb v. Nationstar Mortg., LLC, 174 So.
3d 1039, 1041 (Fla. 4th DCA 2015) (“‘A witness who testifies
at trial as to the date a bank became the owner of the note
can serve the same purpose as an affidavit of ownership.’”
(quoting Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951
(Fla. 4th DCA 2014))).
“[P]ossession of the original note, indorsed in blank, [is]
sufficient under Florida’s Uniform Commercial Code to
establish that [a party is] the lawful holder of the note,
entitled to enforce its terms.” Riggs v. Aurora Loan Servs.,
LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010). Therefore, to
enforce a note endorsed in blank, a foreclosing party must
show that they had possession of the note at the inception of
the lawsuit.
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Guzman v. Deutsche Bank Nat’l Trust Co., 179 So. 3d 543, 545-46 (Fla.
4th DCA 2015).
Additionally, we have held that in order to prove standing to foreclose
based upon a merger, the surviving entity must prove that it “acquired
all of [the absorbed entity’s] assets, including [the] note and mortgage, by
virtue of the merger.” Fiorito, 174 So. 3d at 521.
Here, the record reflects that the original note bore two undated
endorsements: a special endorsement to Fannie Mae which was later
cancelled, and a blank endorsement. However, appellee’s witness
testified that he did not know when either endorsement was placed on
the note, or when the special endorsement to Fannie Mae was cancelled.
Although the witness did state that appellee sent the original loan
documents to its attorney prior to the filing of the initial complaint, no
explanation was offered as to why the copy of the note attached to the
complaint, ostensibly made from the original note as forwarded to the
attorney for the purpose of commencing suit, did not reflect the
endorsements.
In short, the fact that the note attached to the initial complaint did
not contain any endorsements defeats appellee’s assertion that it had
possession of the original note with the requisite endorsements at the
inception merely because the note was sent to its attorney prior to filing
— on the contrary, it suggests that the note sent to the attorney was
devoid of any endorsements authorizing appellee to enforce the
instrument. Although appellee undeniably possessed the note bearing
the blank endorsement at the time of trial, it presented insufficient
evidence that it had possession of the original note containing the blank
endorsement at the time it filed the foreclosure complaint.
Appellee also failed to prove standing to foreclose in light of the
mergers because there was insufficient evidence that the note was
actually an asset of one of the absorbed entities at the time the various
mergers took place. While appellee’s witness testified that he was not
aware of any loans that were not included as assets in the mergers, he
also conceded that the merger documents admitted into evidence did not
specifically mention appellants’ loan as an asset of one of the absorbed
entities. Moreover, because the note was specially endorsed to Fannie
Mae by World Savings at some unknown time, and the special
endorsement was later cancelled at some unknown time, the possibility
remains that the note was actually an asset of Fannie Mae’s at the time
one of the mergers occurred, and that it did not ultimately pass to
appellee via merger. Appellee did not present any evidence to rebut this
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possibility. As such, it failed to present competent, substantial evidence
of standing to foreclose based upon the mergers. Id.
For these reasons, we reverse and remand this case for entry of an
order of involuntary dismissal. Lamb, 174 So. 3d at 1041.
Reversed and Remanded.
CIKLIN, C.J., and WARNER, J., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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