Snow v. Wells Fargo Bank, N.A.

Third District Court of Appeal
State of Florida
Opinion filed January 14, 2015.
Not final until disposition of timely filed motion for rehearing.
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No. 3D14-1547
Lower Tribunal No. 13-8196
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Richard Hubert Snow, et al.,
Appellants,
vs.
Wells Fargo Bank, N.A., etc.,
Appellee.
An Appeal from the Circuit Court for Miami-Dade County, Marvin H.
Gillman, Judge.
John H. Ruiz and Karen J. Barnet-Backer and Christine M. Lugo, for
appellants.
Burr & Forman and John R. Chiles and Christine Irwin Parrish and Gennifer
L. Bridges (Orlando), for appellee.
Before SALTER, EMAS and SCALES, JJ.
EMAS, J.
Richard and Nancy Snow (“the Snows”) appeal a final judgment of
foreclosure entered in favor of Wells Fargo Bank, N.A. (“Wells Fargo”). We
affirm.
FACTS
The Snows executed a note and mortgage on real property in Miami, Florida
on May 25, 2007. Pursuant to the terms of the mortgage, the lender had the option
to accelerate the debt in the event of a default by the borrower:
22. Acceleration; Remedies. Lender shall give notice to
Borrower prior to acceleration following Borrower’s
breach of any covenant or agreement in this Security
Instrument (but not prior to acceleration under Section 18
unless Applicable Law provides otherwise.) 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 is 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.
Lender shall be entitled to collect all expenses incurred in
pursuing the remedies provided in this Section 22,
including, but not limited to, reasonable attorneys’ fees
and costs of title evidence.
2
The Snows failed to make the required monthly payment due on October 1,
2007. On December 6, 2007, Wells Fargo sent the Snows a notice of default,
which provided in pertinent part:
You are hereby provided formal notice by the Servicer
(EMC Mortgage Corporation), as authorized by the
Creditor of the above-referenced home loan (hereinafter
referred to as “the Debt”) that you are in default under
the terms and conditions of the Note and Security
Instrument (i.e. Deed of Trust, Mortgage, etc.) for failure
to pay the required installments when due, and important
data regarding that information is found in this document.
This letter serves as further notice that EMC Mortgage
Corporation intends to enforce the provisions of the Note
and Security Instrument. You must pay the full amount
of the default on this loan by the thirty-fifth (35th) day
from the date of this letter which is 01/10/2008 (or if said
date falls on a Saturday, Sunday, or legal holiday, then on
the first business day thereafter). If you do not pay the
full amount of the default, we shall accelerate the entire
sum of both principal and interest due and payable, and
invoke any remedies provided for in the Note and
Security Instrument, including but not limited to the
foreclosure sale of the property. . . .
You are hereby informed that you have the right to
“cure” or reinstate the loan after acceleration and the
right to assert in the foreclosure proceeding the
nonexistence of a default or any other defense you may
have to acceleration and sale.
As of 12/05/2007 the amount of the debt that we are
seeking to collect is $6,872.72, which includes the sum
of payments that have come due on or after the date of
default. . . .
3
Thereafter, Wells Fargo filed a foreclosure action against the Snows on
March 12, 2008, alleging, inter alia:
There has been a default under the note and mortgage
held by Plaintiff in that the payment due October 1, 2007
and all subsequent payments have not been made.
Plaintiff declares the full amount due under the note and
mortgage to be now due.
All conditions precedent to the filing of this action have
been performed or have occurred.
On June 28, 2011, Wells Fargo voluntarily dismissed, without prejudice, the
foreclosure action against the Snows. Thereafter, on March 5, 2013, Wells Fargo
filed a second foreclosure action against the Snows. The Snows answered this
complaint and alleged as an affirmative defense that the expiration of the five-year
statute of limitations barred the second foreclosure action.
At trial, the Snows argued that the second foreclosure action was barred by
the statute of limitations because the limitations period began to run on January 10,
2008 (the date by which the Snows were required, pursuant to the notice of default
letter, to cure the default) and expired five years later (on January 10, 2013), three
months prior to the filing date of the second foreclosure action. In other words, the
Snows argued, because they failed to cure the default within the time period set
forth in the default letter, the debt was automatically accelerated on January 10,
2008.
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Wells Fargo contended that the date of acceleration was not January 10,
2008, but rather March 12, 2008, the date the complaint was filed in the first
foreclosure action. Therefore, Wells Fargo argued, the five-year limitations period1
had not yet expired when Wells Fargo filed the second lawsuit on March 5, 2013.
The December 7, 2007 letter, it argued, was a notice of default and a notice that
Wells Fargo would take future action, including but not limited to acceleration of
the debt and the filing of a foreclosure action, if the default was not cured.
The trial court determined that the debt was accelerated on the date Wells
Fargo filed the lawsuit on March 12, 2008; that the statute of limitations
commenced on that date; and that the second foreclosure action (filed on March 5,
2013) was accomplished prior to the expiration of the five-year limitations period.
Final judgment of foreclosure was entered thereafter, and this appeal followed.
We review this statute of limitations issue de novo. Grove Isle Ass’n, Inc. v.
Grove Isle Assocs., LLLP, 137 So. 3d 1081 (Fla. 3d DCA 2014).
DISCUSSION
When an acceleration clause is absolute, the entire indebtedness becomes
due immediately upon default. Such an acceleration is self-executing, requiring
neither notice of default nor some further action to accelerate the debt. Baader v.
Walker, 153 So. 2d 51 (Fla. 2d DCA 1963). By contrast, where the acceleration
1 The relevant statute of limitations is provided in section 95.11(2)(c), Florida
Statutes (2008).
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clause is optional (as it is in this case), it is not automatic or self-executing, but
requires the lender to exercise this option and to give notice to the borrower that it
has done so. See Campbell v. Werner, 232 So. 2d 252, 254 n. 1 (Fla. 3d DCA
1970) (noting that the filing of a suit for foreclosure amounted to the exercise of
the option to accelerate and operated as notice to the mortgagor of such election);
Rones v. Charlisa, Inc., 948 So. 2d 878, 879 (Fla. 4th DCA 2007) (quoting Central
Home Trust Co. of Elizabeth v. Lippincott, 392 So. 2d 931, 933 (Fla. 5th DCA
1980)) (holding acceleration option was exercised by filing of foreclosure
complaint and noting that “to constitute an acceleration after default, where the
holder has the option to accelerate, the holder or payee of the note must take some
clear and unequivocal action indicating its intent to accelerate all payments under
the note, and such action should apprise the maker of the fact that the option to
accelerate has been exercised.”); Greene v. Bursey, 733 So. 2d 1111, 1115 (Fla.
4th DCA 1999) (noting that in an installment contract with an optional acceleration
clause, “the entire debt does not become due on the mere default of payment;
rather, it become[s] due when the creditor takes affirmative action to alert the
debtor that he has exercised his option to accelerate”).
The statute of limitations on a mortgage foreclosure action does not
commence until a default in payment of the final installment, unless the mortgage
contains an acceleration clause. Locke v. State Farm Fire and Cas. Co., 509 So. 2d
6
1375 (Fla. 1st DCA 1987); Conner v. Coggins, 349 So. 2d 780 (Fla. 1st DCA
1977).
When the borrower defaults on a payment under a note containing an
optional acceleration clause, the lender can exercise its option to accelerate all
future payments, making the entire debt immediately due and payable. A cause of
action on an accelerated debt accrues, and the statute of limitation commences,
when the lender exercises the acceleration option and notifies the borrower of this
exercise. See Greene, 733 So. 2d at 1115; Monte v. Tipton, 612 So. 2d 714 (Fla.
2d DCA 1993)(holding that, in a mortgage containing an optional acceleration
clause, the cause of action for foreclosure did not accrue, and the statute of
limitations did not begin to run, until the lender exercised her option to accelerate
and demanded the total balance of principal and interest).
We hold that the December 7, 2007 letter did not constitute an acceleration
of the debt nor did it “apprise the maker of the fact that the option to accelerate has
been exercised.” Central Home Trust, 392 So. 2d at 933 (emphasis supplied).
Rather, the December 7th letter served as a notice of default, notice of the Snows
right to cure, and notice that Wells Fargo intended, at some unspecified future date,
to accelerate the debt if the Snows failed to cure the default as set forth in the
letter. The pertinent language of the December 7th letter provided:
This letter serves as further notice that EMC Mortgage
Corporation intends to enforce the provisions of the Note
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and Security Instrument. You must pay the full amount
of the default on this loan by the thirty-fifth (35th) day
from the date of this letter which is 01/10/2008 (or if said
date falls on a Saturday, Sunday, or legal holiday, then on
the first business day thereafter). If you do not pay the
full amount of the default, we shall accelerate the entire
sum of both principal and interest due and payable, and
invoke any remedies provided for in the Note and
Security Instrument, including but not limited to the
foreclosure sale of the property. . . .
(Emphasis supplied.)
Absent from the letter is any declaration by Wells Fargo that the full amount
of principal and interest is immediately due, or any demand for payment of the full
amount of principal and interest. That is because, under the terms of the mortgage,
a tender by the Snows of the default amount would cure the default and prevent
Wells Fargo from accelerating the debt. Yelen v. Bankers Trust Co., 476 So. 2d
767 (Fla. 3d DCA 1985). The payment demanded by the letter was merely the
specific amount necessary to bring the loan current:
As of 12/05/2007 the amount of the debt that we are
seeking to collect is $6,872.72, which includes the sum
of payments that have come due on or after the date of
default. . . .
The Snows’ argument focuses on one portion of the letter which reads: “If
you do not pay the full amount of the default, we shall accelerate the entire sum of
both principal and interest due and payable. . . .” (Emphasis added.) We reject the
Snows’ contention that the phrase “we shall accelerate” somehow converted the
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optional acceleration into a prospective, self-executing acceleration which was
automatically triggered upon the failure of the Snows to cure the default. The
December 7th letter did not indicate that Wells Fargo was exercising its option to
accelerate, but only that Wells Fargo intended to exercise its option to accelerate in
the future, should the Snows fail to cure the default. Therefore, the lapse of the 35-
day grace period (without a cure of the default) did not automatically accelerate the
debt or trigger the commencement of the five-year statute of limitations. Instead,
the limitations period commenced when Wells Fargo filed the March 12, 2008
foreclosure complaint, expressing in clear and unequivocal language that it was
exercising its option and accelerating the debt:
There has been a default under the note and mortgage
held by Plaintiff in that the payment due October 1, 2007
and all subsequent payments have not been made.
Plaintiff declares the full amount due under the note and
mortgage to be now due.
(Emphasis supplied.)
Thus, the statute of limitations would have expired March 12, 2013, and
because the second foreclosure action was filed March 5, 2013, it was not time-
barred.2
Affirmed.
2We find no merit in the other issues raised in this appeal. See Deutsche Bank
Trust Co. Am. v. Beauvais, No. 3D14-575 (Fla. 3d DCA Dec. 17, 2014).
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