IN THE SUPREME COURT OF FLORIDA. Case No. SC

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1 Filing # E-Filed 02/09/ :05:31 PM IN THE SUPREME COURT OF FLORIDA Case No. SC COMMENTS AS TO AMENDMENTS TO THE FLORIDA RULES OF CIVIL PROCEDURE RECEIVED, 02/09/ :08:43 PM, Clerk, Supreme Court HEIDI WEINZETL and ROBERT EDWARDS respectfully submit their comments relating to the Per Curiam Order entered by the Court on December 11, 2014 which amended Florida Rule of Civil Procedure and Forms 1.944, 1.996(a), and 1.996(b), and also adopted new Rule The undersigned are attorneys admitted to the Florida Bar who provide legal representation to lenders and their agents in residential mortgage foreclosure actions. While the amended rules and newly adopted Rule provide much-needed guidance to foreclosure practitioners, they contain certain ambiguities and omissions which may result in unnecessary debate and use of judicial resources if not clarified. The undersigned attorneys submit these comments in an effort to encourage clarification of the ambiguities so that the spirit of Rule may be readily followed by the parties to foreclosure litigation and their counsel.

2 I. Rule A. The definition of claimant as contemplated by Rule should be clearly delineated to include the named plaintiff and any authorized party acting on its behalf. Rule creates certain obligations on the part of the claimant to affirmatively allege the factual and legal bases by which it is entitled to foreclose and to verify the claim for relief. The rule does not, however, define claimant, leaving room for disagreement regarding whether the named plaintiff is the only entity that can be considered the claimant, and whether only the named plaintiff can verify the complaint. Accordingly, the undersigned ask the following: Was the use of the phrase by the claimant in subsection (e) of Rule intended to require that the named plaintiff verify the complaint? If yes, this would seem to abrogate the law of agency which otherwise would permit a loan servicer, who would have the most knowledge and would be acting under power of attorney, to verify a complaint on behalf of the investor in a mortgage foreclosure action. See Fla. Stat (7)(a). In effect, it would mean that a bank teller, who happened to be in the direct employ of a bank, as Trustee, could verify a complaint, the records for which would have been made and maintained by a servicer, who, by virtue of the new rule, would be precluded from verifying the complaint. The rule should be clarified to eliminate potentially inconsistent trial court rulings and ensuing appeals. Presumably, this Court would

3 prefer an employee of the servicer, and not a teller of a named plaintiff trustee bank, to verify complaints. Nonetheless, subsection (a) of Rule mandates that the claimant specifically allege that it is the holder of the original note, or allege the factual basis by which the claimant is a person entitled to enforce. Then, subsection (e) requires that the claimant verify the complaint. These two subsections read in concert suggest that the named plaintiff must be the same party executing the verification. However, subsection (b) provides for circumstances in which a claimant is delegated the authority to institute foreclosure on behalf of the party entitled to enforce. This section suggests that a claimant other than the party entitled to enforce the note and mortgage may institute foreclosure on behalf of an owner, but does not clarify whether he, she or it is permitted to verify a complaint. The options also require the individual verifying the complaint to verify legal conclusions as to, for example, the basis for standing, and without the long-established option of pleading in the alternative These questions invite an examination of Rule that goes beyond its plain language. It is not the practice of Florida courts to read more into a rule than its plain language dictates. See Becker v. Deutsche Bank Nat l Trust Co., 88 So 3d 361(Fla 4th DCA 2012); Trucap Grantor Trust v. Pelt, 84 So.3d 369 (Fla. 2d DCA 2012) Moreover, and regardless of whether the complaint is verified by a

4 teller at the trustee s bank or by the trust s servicer, it will still necessarily be executed by an agent of the party entitled to recoup the funds. The undersigned respectfully submit that the servicer is in a better position to verify a foreclosure complaint that would be the investor. While this Court has not squarely addressed the role of the loan servicer when acting on behalf of its principal, the Second District Court of Appeal has concluded that, at least under the prior rule, a servicing agent, acting under power of attorney for an investor who is named as the plaintiff, may verify complaints and sign affidavits in a mortgage foreclosure action. Deutsche Bank Nat l Trust Co. v. Prevratil, 120 So 3d 573, (Fla 2d DCA 2013) (quashing trial court s order requiring verification by named plaintiff, where such verification requirement would deprive plaintiff of its right to delegate verification duties to its loan servicer pursuant to a durable power of attorney); U.S. Bank Nat l Ass n. v. Marion, 122 So. 3d 398 (Fla 2d DCA 2013) (reversing trial court s dismissal of action based on verification by employee of servicing agent and not by employee of named plaintiff). These rulings by the Second District are instructive because they capture the critical nature of the loan servicer to maintain documents and data on a constant basis regarding the loan being serviced. While a mortgagee (as the named plaintiff) may have the rights to enforce a loan obligation, it would not serve the courts to have its employees verify the complaint in a foreclosure action because those employees

5 do not necessarily have knowledge of the daily activities of the loan. For example, if the plaintiff in an action is Wells Fargo, N.A. in its trustee capacity, the court would presumably not expect a teller at a Wells Fargo branch office to verify the complaint where he or she may have no actual knowledge of the loan. Instead, permitting verification by the party acting in its capacity under a power of attorney (and at the same time maintaining the requirement to describe the source of the servicer s authority, as set forth in Rule 1.115(b)) would seem to make greater sense. B. Rule does not provide for surrender of the original note and allonges at summary judgment or trial. The undersigned attorneys acknowledge and appreciate the necessity of surrendering the original note, along with any corresponding allonges, prior to the entry of a final judgment of foreclosure. Subsection (c) of Rule requires that these documents be filed with the court, suggesting that a filing be made to the Clerk of Court. This practice, however, has presented a challenge in actions which are called up for final judgment hearing or trial only to discover that the court file cannot be located. Where there is no dispute that the original has been filed and the copy presented at trial is identical to the original, the trial court may accept the copy into evidence. Deutsche Bank Nat l Trust Co. v. Clarke, 87 So. 3d 58, 62 (Fla 4th DCA 2012). Unfortunately, where there is a dispute regarding the document filed, and the trial court is unable to locate the file, the court and litigants are presented with additional challenges. As a means to address these circumstances, plaintiffs

6 frequently retain the original documents, having filed true and exact copies with the court, with the intent to surrender the originals at trial prior to the entry of judgment. Such surrender may not result in the Clerk of Court accepting the documents as filed until at or immediately after trial, at which time the trial exhibits are reflected on the court s docket. In the interest of clarification of the rule, the undersigned suggest that the rule be altered to reflect that the original documents must be surrendered prior to the entry of judgment, which would encompass filing with the court in advance, or presentation of the documents at final hearing or trial. II. Form 1.944(a) A. Form 1.944(a) does not include a statement regarding conditions precedent. The new form complaint should include an allegation that all conditions precedent have been satisfied or waived. Nearly all mortgages sought to be foreclosed within Florida include a condition precedent (usually in the form of a notice of intent to accelerate the loan), and [w]here the mortgagee s right to foreclose is dependent upon a condition precedent, the complaint should distinctly aver the performance of such condition. Voght v. Galloway, 291 So. 2d 579 (Fla 1974) (citations omitted). Without the assertion of performance of conditions precedent, this Court has said that the trial court errs when it does not require an amended pleading. Id. Florida Rule of Civil Procedure 1.120(b) requires only that performance be generally asserted, so the inclusion of such a statement would prove

7 a minimal, yet essential, addition to the form. It would avoid a situation whereby the plaintiff follows the proposed form, but then is required to amend to include language regarding satisfaction of conditions precedent. B. Form 1.944(a) is ambiguously phrased as to plaintiff s standing and demands legal training of the individual verifying the complaint. Paragraph 3 of Form 1.944(a) is undoubtedly intended to meet the spirit of the rule whereby the plaintiff clearly sets forth its claim of standing to foreclose. However, the three options provided in this paragraph do not clearly delineate which option is to be utilized in certain circumstances; they seem to abrogate the practice of pleading in the alternative; and they require some bit of legal knowledge on behalf of the individual verifying the complaint For example, option (b) listed in the form states that Plaintiff is a person entitled to enforce the note under applicable law because.. (allege specific facts) In practice, this option may be used in any fact scenario, including those also covered by options (a) and (c). As to option (a), if a plaintiff is the holder of the original note, then the plaintiff is also entitled to enforce the note under applicable law. Likewise, as to option (c), if a plaintiff has been delegated authority to institute a mortgage foreclosure action, then the plaintiff is, again, entitled to enforce the note under applicable law. The only distinction provided by option (c) is that the documents granting authority are identified and must be attached. The

8 form as provided will require litigants to guess at which circumstances warrant the use of which option. The phraseology of paragraph 3 s options proves challenging again when considering a scenario in which a named plaintiff is actually the servicer, acting on the investor s behalf. A servicer, filing in its own name (for the benefit of an investor) may be the holder of a note bearing a blank indorsement (option (a)), a party with delegated authority acting under a power of attorney (option (c)), or generally entitled to enforce (option (b)). The rule does not make clear when the application of each option is appropriate. Option (c), for example, might seem to apply to a servicer delegated the authority to bring suit, but if in possession of a note indorsed in blank (or even to a servicer s investor), the servicer could proceed under subsection (a) or subsection (b). Yet, since a servicer s authority is, in a sense, delegated, they might also be required to proceed under (c). Ultimately, guidance from the Court as to the purpose of three separate options which could overlap in their application would be instructive and appreciated. III. Form 1.944(b) A. Form 1.944(b) does not account for all scenarios in which an original promissory note is unavailable; and, even so, is it necessary to articulate precisely how and when the note became unavailable? Paragraph 4 of Form 1.944(b) requires the plaintiff to select one of four scenarios as the reason for the unavailability of an original promissory note.

9 Moreover, it requires the individual verifying the complaint to confirm the plaintiff s standing at the time the note was lost. First, if a note cannot be located, isn t it enough to say so and explain what the Plaintiff has done to find the original, particularly when adequate protection will be required prior to entry of judgment? Second, isn t the issue the plaintiff s standing at the time the suit is filed, and not at the time the note was lost? Moreover, there are bases beyond those identified by the Court under which the owner does not have the note. For example, if a promissory note is in the possession of a law firm that previously represented the plaintiff, and the law firm exercised a retaining lien over the note, the firm may be subject to a subpoena, but the plaintiff may still be unable to compel production of the note. Such a circumstance would not fall squarely within one of the provided options, but would still provide a basis for a plaintiff s inability to recover the original note. And what if a Plaintiff acquired the rights to enforce a note after it was lost? A general other category which requires the plaintiff to describe the unique circumstances in which it cannot obtain the note would clarify the pleadings and provide the defendants (and the trial court) with notice. B. Form 1.944(b) should include a statement of plaintiff s intent to offer adequate security based on a lost note claim. While Rule 1.115(d) reflects that a plaintiff must provide adequate protection for subsequent attempts to enforce a lost note, Form 1.944(b) is silent as to this

10 element of re-establishment and enforcement of a lost note. Section (2), Florida Statutes require only that adequate protection be offered prior to the entry of judgment; however, the Fifth District Court of Appeal has recently opined that adequate protection is essential to standing, which the Lost Note Affidavit (or Affidavit of Compliance ) is designed to establish.. Delia v. GMAC Mortgage Corp., 2014 WL (Fla 5th DCA 2014). Since standing is determined as of the time the complaint is filed, perhaps, the form Affidavit of Compliance should include a written promise to indemnify or otherwise provide adequate protection, as provided by Section (1)(a), Florida Statutes. See McLean v. JP Morgan Chase Bank Nat l Ass n., 79 So. 3d 170 (Fla 4th DCA 2012) ( [A] party s standing is determined at the time the lawsuit was filed. ) Additionally, the trial court lacks jurisdiction to entertain and adjudge matters which have not been the subject of proper pleadings and notice. Instituto Patriotico Y Docente San Carlos, Inc. v. Cuban American Nat l. Found., 667 So. 2d 490, 492 (Fla 3d DCA 1996). Since the Affidavit of Compliance is required at the time the complaint is filed, the spirit of Rule might be better served by including a promise to indemnify, or provide adequate protection, within the form. IV. Conclusion The undersigned attorneys appreciate the efforts made by Florida s legislature and this Court to expedite the foreclosure process and believe that clarifications and

11 additions based on the above discussed comments will further the stated goals of Rule It is the intent of these comments to present points of ambiguity to the Court so that trial courts and litigants may avoid unnecessary debate about the meaning and application of the rule and its corresponding forms. Robertson, Anschutz & Schneid, P.L Congress Ave., Suite 100 Boca Raton, FL Telephone: Facsimile: By: /s/ Heidi J. Weinzetl Heidi J. Weinzetl Florida Bar No.: Robert R. Edwards Florida Bar No.:

12 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on February 9, 2015 I filed the foregoing electronically in accordance with Fla. Admin. Order No. AOSC13-7. I further certify that I served the foregoing upon the following recipients via electronic mail: Kevin B. Cook, Committee Chair Rogers, Towers, P.A. 818 A1A N., Suite 208 Ponte Vedra Beach, Florida kcook@rtlaw.com Ellen Sloyer, Bar Staff Liaison to the Committee 651 E. Jefferson Street Tallahassee, Florida esloyer@flabar.org /s/ Heidi J. Weinzetl Heidi J. Weinzetl, Esquire