IN THE FLORIDA SUPREME COURT

Transcription

1 IN THE FLORIDA SUPREME COURT DCA CASE NO.: 4Dll-905 LOWER TRIBUNAL CASE NO.: (04) ON APPEAL FROM THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT JEAN W. PHADAEL AlKiA JEAN PHADAEL, APPELLANTS, V. DEUTSCHE BANK TRUST COMPANY AMERICAS AS TRUSTEE FOR RALI 2007QS9, APPELLEE. JURISDICTIONAL BRIEF OF APPELLANT 511 LAW, P.A. ATTORNEYS FOR ApPELLANT Garry W. Johnson, Esq. (Fla. Bar No ) Bruce K. Hennan, Esq. (Fla. Bar No ) 1401 East Broward Blvd., Suite 206 Fort Lauderdale, FL Tel: Fax:

2 TABLE OF CONTENTS PREFACE... 1 WHETHER "STANDING" IS THE EXISTENCE OF A "CASE OR CONTROVERSY BETWEEN THE PARTIES."... 1 WHETHER THE LINE OF CASES IN WHICH "LACK OF A CASE OR CONTROVERSY BETWEEN THE PARTIES IS A FAILURE TO PROPERLY INVOKE THE SUBJECT MATTER JURSDICTION OF THE COURT THAT CANNOT BE WAIVED" IS IN CONFLICT WITH THE LINE OF CASES IN WHICH "LACK OF STANDING IS AN AFFIRMATIVE DEFENSE THAT CAN BE WAIVED."....l 1. The Decision The Court Record Conflicts in Florida Law "Standing" and "Case or Controversy. " Jurisdictional Defect that Cannot Be Waived? Affirmative Defense That Can Be Waived? A Red Herring. The lower court opined as follows: The Instant Case Great Importance Appendix A - The Decision ofthe Fourth District Court of AppeaL... 12

3 TABLE OF AUTHORITIES Cases Beaulieu v. JPMorgan Chase Bank, Nat'!. Ass 'n., No. SC Cowart v. City of West Palm Beach, 255 So 2d 673 (Fla. 1971)... 7 Department of Revenue v. Kuhnlein, 646 So.2d 717 (Fla. 1994)... 4,5 Ferreiro v. Philadephia Indemnity Insurance Company, 982 So. 2d 374 (F1a 3 rd DCA 2006)... 4 Interlachen Lakes Estates, Inc. v. Brooks, 341 So.2d 993 (F1a.l976)... 6 Krivanek v. Take Back Tampa Political Committee, 625 So. 2d 840 (Fla. 1993)... 7 Love v. Hannah, 72 So. 2d (Fla. 1954)... 7 Martinez v. Scanlon, 582 So. 2d 1167,(F1a. 1991)... 6 Polk County v. Sojka, 702 So. 2d 1243 (Fla. 1997)... 6 Raines v. Byrd, 521 U.S. 811, I 17 S.Ct. 2312, 138 L.Ed.2d 849 (1997)... 4

4 PREFACE Appellant(s), JEAN W. PHADAEL A/KiA JEAN PHADAEL (hereinafter referred to as "Appellant"), by and through its undersigned counsel, moves the Florida Supreme Court for review of the questions set forth herein. The Florida Supreme Court has discretionary jurisdiction to review these questions (I) to resolve the conflicts in decisions outlined herein between the Florida Supreme Court and the instant decision, and (2) to determine the important questions outlined herein which need to be answered. WHETHER "STANDING" IS THE EXISTENCE OF A "CASE OR CONTROVERSY BETWEEN THE PARTIES." WHETHER THE LINE OF CASES IN WHICH "LACK OF A CASE OR CONTROVERSY BETWEEN THE PARTIES IS A FAILURE TO PROPERLY INVOKE THE SUBJECT-MATTER JURSDICTION OF THE COURT THAT CANNOT BE WAIVED" IS IN CONFLICT WITH THE LINE OF CASES IN WHICH "LACK OF STANDING IS AN AFFIRMATIVE DEFENSE THAT CAN BE WAIVED." If "standing is the existence of a case or controversy between plaintiff and defendant," then these two lines of cases are legally inconsistent and in direct conflict with each other and in need of the attention of this Court. I l. The Decision. This appeal stems from the Fourth District Court of Appeal's "Per Curium Affirmed" decision and written opinion rendered in this These same questions have been raised in a similar case recently appealed to this Supreme Court on March 30, 2012 and now pending, Beaulieu v. JPMorgan Chase Bank, Nat'!. Ass 'n., No. SC I

5 matter on February 8, 2012 (the "Decision") in which the trial court's decision that denied Appellant's "Motion to Vacate Final Judgment of Foreclosure and To Cancel And/Or Rescind Auction Sale" (the "Motion to Vacate") rendered on March 2, 2011 was affirmed? In pertinent part, the court opined as follows: "We conclude that because Phadael was defaulted and he failed to defend the action at any point before entry of the final judgment, his claim that Deutsche Bank lacked standing at the inception of the suit is not a ground for setting aside the judgment as "void" under rule 1.540(b)(4)." 2. The Court Record. On July 29, 2009, Appellee filed a foreclosure complaint against Appellant. The Complaint failed to state a case or controversy between Appellee and Appellant because the Complaint did not include any copy of a note or note endorsement that was payable or endorsed to Appellee, included a lost note count (that was never prosecuted), included a mortgage exhibit that, importantly, defined and identified the "Lender" and payee on the note as a nonparty, "AMNET MORTGAGE, INC.," (hereinafter "AMNET") and included the mere legal conclusion (without any underlying factual allegations required by Florida's UCC) that "Plaintiff is owner of said Note." Appellant was defaulted on August 18,2010. At the summary judgment hearing, Appellee filed a "Notice of Filing Original Note, Mortgage, and Amended Affidavit ofindebtedness" that now 2 See Attached Exhibit A for a copy of the Decision. Appellant filed a Motion for Re-Hearing and for Re-Hearing En Bane that were denied. 2

6 included an Original Note with two new indorsements on an attached page, one specially endorsed to Appellee, and an affidavit, none of which indorsements or affidavit was dated or included any indication that the new indorsements were effectuated to Appellee before the Complaint was filed. Summary judgment was entered and Appellant filed a Rule 1.540(b)(4) motion arguing that the summary judgment was "void" because Appellee lacked "standing or case or controversy" on the date of filing the Complaint, that none of the subsequent Original Note or affidavits corrected this "lack of standing" at the time the Complaint was filed and therefore the jurisdiction of the lower court was never properly invoked and the proceedings, and the subsequent default and summary judgment, were necessarily "void from inception." Appellant's motion was denied and an appeal ensued. 3. Conflicts in Florida Law. The Decision has brought to light a direct conflict in Florida law. As noted herein, "standing" is requirement that "a case or controversy must exist between plaintiff and defendant" for a matter to be judicial in nature. Yet, we see two lines of cases that treat this legal requirement differently, one that treats this legal requirement as a jurisdictional defect that cannot be waived by the court or by the parties, the other that treats it as an affirmative defense that can be waived by the parties. These divergent positions cannot be reconciled and are in need of the attention and guidance of this Court. 3

7 4. "Standing" and "Case or Controversy." "Standing" has been defined by the Florida Supreme Court, the U.S. Supreme Court and other courts as "the existence of a case or controversy between plaintiff and defendant," i.e., they are one and the same legal principle, as evidenced by the following four published decisions: Department of Revenue v. Kuhnlein, 646 So.2d 717 (Fla. 1994), "Unlike the federal courts, Florida's circuit courts are tribunals of plenary jurisdiction. Art. V, Sec. 5, Fla. Const. They have authority over any matter not expressly denied them by the constitution or applicable statutes. Accordingly, the doctrine of standing certainly exists in Florida, but not in the rigid sense employed in the federal system. We thus are not persuaded by the federal standing cases cited by the State.... We do agree that. except as otherwise required bv the constitution. Florida recognizes a general standing requirement in the sense that every case must involve a real controversy as to the issue or issues presented. See Interlachen Lakes Estates, Inc. v. Brooks, 341 So.2d 993 (Fla.l976). Put another way, the parties must not be requesting an advisory opinion, id., except in those rare instances in which advisory opinions are authorized by the Constitution." (emphasis added) Raines v. Byrd, 521 U.S. 811,117 S.Ct. 2312,138 L.Ed.2d 849 (1997): "One element of the case or controversy requirement is that appellees, based on their complaint, must establish that they have standing to sue. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561,112 S. Ct. 2130, , 119 L.Ed.2d 351 (1992) (plaintiff bears burden of establishing standing)." Ferreiro v. Philadelphia Indemnity Insurance Company, 982 So. 2d 374 (Fla. 3 rd DCA 2006) "... To satisfy the requirement of standing, the plaintiff must show that a case or controversy exists between the plaintiff and the de&ndant and that such case or controversy continues from the commencement through the existence ofthe litigation." (emphasis added) United Auto. v. Diagnostics of S. Florida, 921 So.2d 23 (Fla. App., 2006), "To satisfy the requirement of standing, the plaintiff must show that a case or controversy exists between the plaintiff and the defendant. Godwin v. 4

8 State, 593 So.2d 211 (Fla. 1992); Montgomery v. Dep't of Health and Rehabilitative Servs., 468 So.2d 1014 (Fla. 1st DCA 1985). If "standing" and "case or controversy" are one and the same, the legal result of the lack thereof should be the same as well, regardless of the nomenclature used. 5. Jurisdictional Defect that Cannot Be Waived? This issue has most often been addressed in cases involving declaratory actions and class action certifications in which the trial and appellate courts almost always conduct a detailed analysis and review of "standing" before addressing the questions at hand. In these cases, this Court and others have recognized that a "case or controversy" must exist for the proceeding to be "judicial in nature." "Lack of standing" has been paraphrased as "lack of a case or controversy between the parties," and this Court has ruled that "standing or case or controversy" cannot be created or waived by the parties or by the court, that lack of a case or controversy between plaintiff and defendant constitutes a failure to properly invoke the subject-matter jurisdiction of the court and that both original and appellate courts are bound to police their jurisdiction sua sponte, whether or not such jurisdictional defect was raised by the parties below. Four of these Florida Supreme Court cases are cited below: Department of Revenue v. Kuhnlein, 646 So.2d 717 (Fla. 1994), "... Florida recognizes a general standing requirement in the sense that every case must involve a real controversy as to the issue or issues presented." 5

9 Interlachen Lakes Estates, Inc. v. Brooks, 341 So.2d 993 (Fla.l976), "... These elements are necessary in order to maintain the status of the proceeding as being judicial in nature and therefore within the constitutional powers of the courts. May v. Holley, 59 So.2d 636, 639 (Fla. I 952), reaffirmed by, Martinez v. Scanlan, 582 So.2d 1167, 1170 (Fla.1991 )." Martinez v. Scanlon, 582 So. 2d I I 67,(Fla. 1991), "... there must exist some justiciable controversy between adverse parties that needs to be resolved for a court to exercise its jurisdiction. Otherwise, any opinion... would be advisory only and improperly considered in a declaratory action." Polk County v. Sojka, 702 So. 2d 1243 (Fla. 1997), "... [c]ourts are bound to take notice of the limits of their authority and if want of jurisdiction appears at any stage of the proceedings, original or appellate, the court should notice the defect and enter an appropriate order.... This is because the limits of a court's jurisdiction are of "primary concern," requiring the court to address the issue sua sponte when any doubt exists." Mapoles v. Wilson, 122 So.2d 249,251 (Fla. 1st DCA 1960)." Even in those cases in which the defendant was willing to voluntarily Waive "standing," the courts have acknowledged that such would be improper and outside the jurisdiction of the court. This Court has expressly acknowledged that the limits of a court's jurisdiction are of "primary concern" and must be addressed on the court's own initiative, regardless of when or how the issue was raised. The desire for "finality of judgments" must give way to the "primary concern of jurisdiction" when the jurisdiction of the court was never properly invoked for lack of a case or controversy between the parties. 6. Affirmative Defense That Can Be Waived? However, there are a handful of cases outside the context of declaratory actions and class action certifications, in which "lack of standing" was not raised by the trial court or by the 6

10 parties until after trial or after judgment. There, "lack of standing" was not discussed in "jurisdictional" terms, but rather such opinions were couched in terms of "waiver" and as "an issue raised for the first time on appeal." This handful of cases has become the mantra of the foreclosure plaintiff bar and has been cited for the proposition that "lack of standing" is an affirmative defense that must be raised by the defendant and the failure to raise it generally results in waiver. The underlying precedent for this line of cases can be found in the following three Florida Supreme Court cases: Love v. Hannah, 72 So. 2d (Fla. 1954) (standing cannot be raised for the first time on appeal); Cowart v. City of West Palm Beach, 255 So 2d 673 (Fla. 1971) (standing cannot be raised for the first time on appeal and is waived if not raised at the trial court level); and Krivanek v. Take Back Tampa Political Committee, 625 So. 2d 840 (Fla. 1993) (standing should have been raised as an affirmative defense and failure to do so constitutes a waiver of that defense). If this line of cases is to be upheld and "lack of standing" is an affirmative defense that can be waived by a defendant, then "lack of standing or case or controversy" could never be raised by the court on its own initiative. Yet, that is the explicit directive of this Court in the decisions cited in the preceding paragraph #5 and in the numerous appellate decisions based thereon, namely, that without a "true case or controversy," any proceedings would be advisory only and outside the jurisdiction of the court. Only if "lack of standing or case or controversy" IS 7

11 fundamental to properly invoking the jurisdiction of the court can it be raised by the court on its own initiative. 7. A Red Herring. The lower court opined as follows: "We conclude that because Phadael was defaulted and he failed to defend the action at any point before entry of the final judgment, his claim that Deutsche Bank lacked standing at the inception of the suit is not a ground for setting aside the judgment as "void" under rule 1.540(b)( 4)." This reasoning flies in the face of the cases cited in Paragraph #5 hereof. If Appellant cannot "voluntarily waive standing" to create jurisdiction, then it only stands to reason that Appellant cannot "involuntarily admit standing" by default or by any other action. This Court should not be distracted by this red herring in this Court's review ofthese conflicts. The complaint should evidence "standing" on its face which it cannot do when the note and mortgage remain payable and granted to a non-party to the suit, directly contradicting plaintiffs bald statement of a legal conclusion (without any factual allegations in support thereof) that plaintiff is the "owner or holder" ofthe note. 8. The Instant Case. In the instant case, neither the complaint nor the evidence in the court record at summary judgment supported any conclusion whatsoever that Appellee had "standing" when the complaint was filed. Beginning with the Complaint, Appellee did not attach a copy of the original note with an endorsement to the Complaint (a conspicuous omission and evidence on its face that Appellee did NOT possess the endorsed note at that time), did not allege any 8

12 factual basis that the note had been endorsed or possession transferred to Appellee (conspicuous again since the mortgage exhibit only established Amnet as the note payee) and did not allege that Appellee was the "holder" of the note (instead alleging only that it was an "owner"). These types of omissions in the Complaint (most egregiously, that a plaintiff can sue on a note payable to a third party without including a copy of the note endorsed to plaintiff, or at least factual allegations that the note was endorsed and transferred to the plaintiff) have become common pleading practices in residential foreclosures and purposefully obscure the facts as to whether Appellee has truly acquired possession and endorsement of the note (i.e. "standing" in a foreclosure suit) before the complaint was filed. Appellee has argued that submittal of the original endorsed note at summary judgment is sufficient to evidence "standing" at complaint and throughout the litigation. But there was no endorsement date, no affidavit and no other evidence to prove when endorsement or possession or "holder" status may have been obtained by Appellee. The only logical conclusion to be drawn, especially at a summary judgment hearing, was that Appellee obtained endorsement and possession of the original note (and therefore "standing") after the Complaint was filed. Due to Appellee's inartful, ifnot misleading, Complaint, it was incumbent upon Appellee, not AppeIIant, to prove to that "standing" existed when the complaint was filed, otherwise Appellee could not properly invoke the 9

13 jurisdiction of the lower court. The original note submitted at summary judgment may have proven "standing" existed at summary judgment, but neither it nor any other affidavit nor any other evidence did anything to cure the fatal lack of "standing" when the Complaint was filed. 9. Great Importance. Appellant seeks review by this court because the questions involved are important to Florida to prevent a miscarriage of justice in the treatment of homeowners in residential foreclosures. Foreclosures are the single largest litigation arena of our time and "lack of standing" is perhaps the single most important legal issue therein. Many homeowners are un-represented and easy prey for foreclosure plaintiffs that have abused and taken unfair (and sometimes illegal) advantage ofthese homeowners, ifnot the courts themselves, by failing to adhere to the jurisdictional and procedural strictures established to protect the constitutional rights of all litigants. "Standing" in foreclosure cases should be self-evident from the pleadings and the evidence, not a creature of a defendant's default, and when it is not self-evident, that is a jurisdictional defect of the plaintiffs' own making and defendants should be permitted to attack this jurisdictional defect at any time. WHEREFORE, Appellant requests that this Court exercise its discretionary jurisdiction to resolve these conflicts and answer these questions of great importance to the State of Florida. 10

14 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was sent via U.S. Mail on this 231@ of April, 2012 to Counsel for Appellee, Bradley Arant Boult Cummings, LLP, Christian W. Hancock, Bank Of america Corporate Center, 100 N. Tryon Street, Suite 2690, Charlotte, NC CERTIFICATE OF FONT COMPLIANCE I hereby certify that the fonts used in this brief comply with the font requirements of Fla. R. App. P. 9.21O(a)(2). 11

15 Appendix A - The Decision of the Fourth District Court of Appeal 12

16 ..., DISTRICT COURT OF ApPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT January Term 2012 JEAN W. PHA.DAEL a/k/a JEAN PHA.DAEL, Appellant, v. DEUTSCHE BANK TRUST COMPANY AMERICAS as Trustee for RALI 2007QS9, Appellee. TAYLOR, J. No.4Dll-905 [February 8,2012 J Jean Phadael appeals a non-final order denying his rule 1.540(b) motion to vacate a final judgment of foreclosure. We conclude that because Phadael was defaulted and he failed to defend the action at any point before entry of the fmal judgment, his claim that Deutsche Bank lacked standing at the inception of the suit is not a ground for setting aside the judgment as "void" under rule 1.540(b)(4). We therefore affirm. On July 29, 2009, Deutsche Bank fjled a two-count mortgage foreclosure complaint against Jean Phadael. Count I sought' to reestablish a promissory note, alleging that the original note was lost or destroyed, that Deutsche Bank "is the owner of said note," and that Deutsche Bank was in possession of the note when the loss of possession occurred. Count II sought to foreclose a mortgage on Phadael's real property, alleging that Phadael was in default under the note and mortgage. The copy of the mortgage attached to the complaint stated that the lender was Amnet Mortgage, Inc., and that the mortgagee was MERS. Phadael did not fjle an answer or otherwise respond to the complaint, and a default was entered against him. Phadael never moved to set aside the default. On or about the' same day as the summary judgment hearing, Deutsche Bank fjled in the circuit court the original note, the original mortgage, and an "Amended Affidavit of Indebtedness." '. The original note

17 contained an undated special endorsement in favor of Deutsche Bank. Additionally, the Amended Affidavit of Indebtedness stated that Deutsche Bank was "the designated holder of the mortgage and note," and that Phadael defaulted under the terms of the note and mortgage. Following the summary judgment hearing, the trial court entered a final judgment of foreclosure. Subsequently, Phadael, through counsel, filed a motion to vacate the final judgment of foreclosure, arguing primarily that the judgment should be vacated under Florida Rule of Civil Procedure 1.540(b)(4} because the judgment was "void ab initio" due to Deutsche Bank's lack of standing on the date it filed the complaint. The trial court denied the motion to vacate, prompting this appeal. On appeal, Phadael mainly argues that Deutsche Bank lacked standing to foreclose, specifically at the inception of the lawsuit. A trial court may relieve a party from a fmal judgment on the ground that "the judgment or decree is void." Fla. R. Civ. P (b)(4). An appellate court reviews an order on a rule 1.540(b) motion for relief from judgment under an abuse of discretion standard. See Freemon v. Deutsche Bank Trust Co. Ams., 46 So. 3d 1202, 1204 (Fla. 4th DCA 2010). Florida Rule of Civil Procedure 1.140(b) provides that every defense in law or fact to a claim for relief in a pleading shall be asserted in the responsive pleading, if one is required. However, the rule identifies seven defenses that a defendant may raise by motion before pleading. Fla. R. Civ. P (b}. "A motion making any of these defenses shall be made before pleading if a further pleading is permitted." ld. Furthermore, "[alny ground not stated shall be deemed to be waived except any ground showing that the court lacks jurisdiction of the subject matter may be made at any time." ld. Accordingly, defenses are generally waived if not raised by pre-answer motion or responsive pleading. Fla. R. Civ. P (h)(1). Likewise, a default terminates the defending party's right to further defend, except to contest the amount of unliquidated damages. Donohue v. Brightman, 939 So. 2d 1162, 1164 (Fla. 4th DCA 2006). When a default is entered, the defaulting party admits all well-pled factual allegations of the complaint. ld. We have previously explained that lack of standing is an affirmative defense that must be raised by the defendant and the failure to raise it generally results in waiver. See Glynn v. First Union Nat'/ Bank, 912 So. 2d 357, 358 (Fla. 4th DCA 2005) (holding that a homeowner waived any claim that the bank lacked standing to foreclose where the homeowner never filed a motion or an answer in the trial court); see also Schuster v. 2

18 Blue Cross & Blue Shield of Fla., Inc., 843 So. 2d 909, 912 (Fla. 4th DCA 2003); but cj. Maynard v. Fla. Bd. of Educ., 998 SO.. 2d 1201, 1206 (Fla. 2d DCA 2009) (holding that while standing may not beraisedfor the first time on appeal, the defendant does not necessarily have to raise standing only by means of an affirmative defense; it was sufficient to raise it in a motion to set aside verdict because "the pertinent question is whether the issue was raised at the trial court, not how it was raised"). Here, Phadael did not file an answer, he was defaulted, and he never defended this action at all before the final judgment of foreclosure. If the issue of standing cannot be raised for the first time on appeal from a final judgment, it follows that it cannot be raised for the first time in a motion to set aside a judgment under rule 1.540(b)(4). A rule 1.540(b) motion is not a substitute for a motion for rehearing or an appeal. See Beaulieu v. JPMorgan Chase Bank Nat'l Ass'n, 2012 WL (Fla. 4th DCA Jan. 11, 2012). Even where a judgment is entered in favor of a plaintiff that lacks standing, the judgment is merely voidable, not void. See Jones-Bishop v.' Estate of Sweeney, 27 So. 3d 176, 177 (Fla. 5th DCA 2010). A judgment that is merely voidable cannot be set aside under rule 1.540(b)(4). See Miller v. Preefer, 1 So. 3d 1278, 1282 (Fla. 4th DCA 2009). Because Phadael was defaulted and never defended the action at any point before the entry of the final judgment, the claim that Deutsche.. Bank lacked standing at the inception of the suit would, at most, render. the judgment voidable, not void. Therefore, the judgment may not be set aside as "void" under rule 1.540(b)(4). See Beaulieu, 2012 WL ("Because' appellant defaulted, she cannot contest, as she tries to do in her post-judgment motion, the allegations of the complaint that the appellee was the owner and holder of the note and mortgage."). Affirmed. DAMOORGIAN and GERBER, JJ., concur. * * * Appeal of non-final order from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Michael L. Gates, Judge; L.T. Case No Garry W. Johnson and Bruce K. Herman of the 511 Law, P.A., Fort Lauderdale, for appellant. D. Brian O'Dell, Christian W. Hancock, Ann T. Taylor and Jose D. Vega of Bradley Arant Boult Cummings LLP, Birmingham, AL, for 3

19 appellee. Notfinal until disposition of timely filed motionfor rehearing. 4