IN THE SUPREME COURT OF FLORIDA

Transcription

1 IN THE SUPREME COURT OF FLORIDA SANDRA P. CASTILLO, Sc12.-16n Petitioner, DCA Case No.: 3D VS. DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR MORGAN STANLEY ABS CAPITAL I 2 INC. TRUST 2006-HE7 MORTGAGE PASS-THROUGH CERTIFICATES, e SERIES 2006-HE7, Respondent. ON PETITION FOR REVIEW FROM THE THIRD DISTRICT COURT OF APPEAL STATE OF FLORIDA JURISDICTIONAL BRIEF OF PETITIONER SANDRA P. CASTILLO Jimenez, Milian & Associates, P.L.L.C. Robert R. Jimenez, Esq., Florida Bar No.: SW 32"d Ave o Suite 110. Miami, FL r Telephone: Fax: Attorneys for Petitioner

2 TABLE OF CONTENTS Page TABLE OF CITATIONS ii STATEMENT OF THE CASE AND FACTS 1 SUMMARY OF ARGUMENT 3 ARGUMENTS: I. THE SUPREME COURT HAS JURISDICTION TO REVIEW THE INSTANT CASE BECAUSE THERE IS AN EXPRESS AND DIRECT CONFLICT BETWEEN THE THIRD DISTRICT COURT'S DECISION AND THE DECISIONS OF THE FOURTH AND SECOND DISTRICT COURT. 4 CONCLUSION 9 CERTIFICATE OF SERVICE 10 CERTIFICATE OF COMPLIANCE 10

3 TABLE OF CITATIONS Cases Patte Castillo v. Deutsche Bank National Trust Company, etc. Case no. 3D (Fla. 3d DCA June 6, 2012) 3-9 General Development Corp. v. Kirk 251 So. 2d 284 (Fla. 2d DCA 1971) 4, 5, 6, 7, 8 Martin Properties, Inc. v. Florida Industries, etc., et al. 833 So. 2d 825 (Fla. 4d DCA 2002) 4, 5, 6, 7, 8 Other Authorities Florida Rule of Appellate Procedure Florida Rule of Appellate Procedure

4 STATEMENT OF THE CASE AND FACTS The Petitioner, Sandra P. Castillo (herein "Petitioner"), an original Defendant and Appellant below, originally perfected her appeal to Florida's Third District Court of Appeal from a Final Order of the Eleventh Judicial Circuit Court in and for Miami-Dade County, Florida, entered on July 28, (R ) A Final Judgment of Foreclosure (attached to the Notice of Appeal to the Third District Court at R ) was awarded on that day to Respondent Deutsche Bank National Trust Company (herein "Respondent"), the original Plaintiff and Appellee below. The appeal to the Third District of Appeal challenged, as reversible error, the denial of Petitioner's Motion for Summary Judgment on November 22, 2010, as well as the granting of Respondent's Motion for Summary Judgment and the entry of the Final Judgment of Foreclosure. Originally, the Respondent filed its Complaint to reform and foreclose a mortgage on December 1, The Respondent is the trustee of a New York common law trust, Morgan Stanley ABC Capital I Inc. Trust 2006-HE7 (herein the "Trust"), which it filed the instant suit on behalf of. Attached to the Complaint was a promissory note made payable to a lender not a party to the instant action (WMC Mortgage Corp.) and a mortgage instrument that listed Mortgage Electronic Registration Systems, Inc. as the mortgagee and nominee of the lender, WMC Mortgage Corp. (R.6-42.) Respondent pled in the Complaint that the subject 1

5 promissory note was transferred to it and that it owned and held the note and mortgage. Id. Petitioner, via her Answer and Affirmative Defenses to the Complaint (R ), Memorandum in Opposition to Plaintiff's Motion For Summary Judgment (R ), and in an Affidavit (R ) denied that the Trust and/or the Respondent properly owned or held the note or mortgage (and that, as such, neither had standing to foreclose). The case proceeded to the summary judgment stage with the parties filing cross motions for summary judgment. Petitioner's Defensive Motion for Summary Judgment raised issues which, when addressed on appeal, were of first impression in Florida's appellate courts. The issues were: 1) whether a defendant has the ability to challenge a plaintiff trust's standing by contesting its ownership of instruments pursuant to the limitations outlined in the trust documents; 2) whether a trust can take ownership and hold a note and mortgage in violation of its trust documents; and 3) whether the trustee of the trust can commit the ultra vires act of enforcing loan documents that its trust does not own. On November 22, 2010, the trial court denied Petitioner's Defensive Motion for Summary Judgment, in essence holding that a defendant cannot challenge a plaintiff trust's standing by contesting the trust's non-ownership of instruments stemming from a violation of the terms regulating the trust. An appeal was filed after the trial court entered summary judgment for Respondent, but said appeal was 2

6 dismissed by the Third District Court as premature. (R ) On July 28, 2011, the trial court entered a Final Judgment of Foreclosure, and Petitioner again appealed to the Third District Court of Appeal.' (R ) In its opinion, the Third District Court rejected well established Florida precedent (discussed infra) when it held that because Petitioner is not a party to the Trust documents and not a third party beneficiary therof, Petitioner could not challenge Respondent's lack of standing based upon violations of the trust terms. Petitioner filed a timely Motion for Rehearing, Clarification, and Certification, and a non-party filed a Motion for Leave to File an Amicus Curiae Brief in Support of Rehearing. On July 6, 2012, the Third District Court denied both motions. SUMMARY OF ARGUMENT The Florida Supreme Court has jurisdiction to review the instant case based on conflicts between District Courts of Appeal. The Third District Court of Appeal improperly adopted and utilized a privity based standard to determine that Petitioner could not challenge Respondent's lack of standing based upon violations of the corresponding trust documents. The Third District Court's adoption of the privity standard directly conflicts with two prior cases that explicitly reject privity in favor of a "sufficient interest" test: General Development Corp. v. Kirk, 251 So. Castillo v. Deutsche Bank National Trust Company, etc., Case no. 3D (Fla. 3d DCA June 6, 2012). 3

7 2d 284 (Fla. 2d DCA 1971) and Martin Properties, Inc. v. Florida Industries Investment Corp., et al., 833 So. 2d 825 (Fla. 4d DCA 2002). There is a common jurisprudential theme and fundamental question of law inherent to the instant case and the afore-cited cases: "what, under Florida law, is the standard for standing that a court should employ?" The Third District Court's opinion below explicitly and directly conflicts with precedent, and as such this Court should invoke its discretionary jurisdiction. ARGUMENT I. The Florida Supreme Court has jurisdiction to review the instant case because there is an express and direct conflict between the Third District Court's decision and the decisions of the Fourth and Second District Courts. The Third District Court of Appeal adopted a privity based standard2 when resolving the issue of whether the Petitioner (the Appellant/Defendant borrower) has the ability to challenge a plaintiff trust's standing by contesting the trust's ownership of the note and mortgage pursuant to the limitations outlined in the trust's documents. The adoption of the privity based standard by the Third District Court explicitly and directly conflicts with Florida cases that reject privity in favor 2 The Opinion by the Third District Court states that: "Because the appellant is neither a party to nor a third-party beneficiary of the trust, we find the appellant lacks standing to raise this issue..."

8 of a "sufficient interest" test.3 On appeal, Petitioner relied on two cases in particular: General Development Corp. v. Kirk, 251 So. 2d 284 (Fla. 2d DCA 1971) (hereinafter "General Development") and Martin Properties, Inc. v. Florida Industries Investment Corp., et al., 833 So. 2d 825 (Fla. 4d DCA 2002) (hereinafter "Martin Properties, Inc."). While the facts in General Development, Martin Properties, Inc., and the instant case differ from one another, both General Development and Martin Properties, Inc. make clear that, as a matter of Florida law, the mode of standing to be employed is based upon having a sufficient interest in the outcome of litigation, not privity of contract. Such precedent has been the crux of Florida standing law for over four decades, and the Third District Court's rejection of the sufficient interest test is therefore in direct conflict with said cases. In General Development Corp. v. Kirk, 251 So. 2d 284 (Fla. 2d DCA 1971), the Second District Court of Appeal analyzed and explained precisely what constitutes the concept of standing. "Standing is, in the final analysis, that sufficient interest in the outcome of litigation which will warrant the court's entertaining it. It is beyond doubt that standing is, in most states, no longer determined by first determining some abstract question such as privity." The See Martin Properties, Inc. v. Florida Industries Investment Corp., et al., 833 So. 2d. 825 (Fla. 4d DCA 2002) and General Development Corp. v. Kirk, 251 So. 2d 284 (Fla. 2d DCA 1971).

9 Second District Court further elaborated that "it is not "privity" but a legitimate interest warranting invocation of the judicial power of the state which ought to determine standing..." The Second District Court's explanation in General Development Corp. was the foundation for the Fourth District Court's decision in Martin Properties, Inc. over thirty years later. In Martin Properties, Inc., the appellant, Martin Properties, Inc. ("MPI"), appealed a trial court order that denied it standing to challenge an assignment of the equity redemption regarding property that MPI had been the high bidder for at a mortgage foreclosure sale. Florida Industries Investment Corp. (herein "FIIC") had assigned its equitable right of redemption to VOSR Industries, and the trial court ruled that MPI did not have standing to challenge said assignment. The Fourth District Court of Appeal reversed and rejected the trial court's holding that "MPI had no standing to challenge the validity of the assignment because MPI was neither a party to it nor a third party beneficiary of it." "That", the Fourth District Court pointed out, "is not the test." Relying on and quoting from the Second District Court's opinion in General Development Corp.,4 the Fourth District Court of Appeal held that "if...the assignment of the equity of redemption was not valid, MPI, as the successful So. 2d 284, 286 (Fla. 2d DCA 1971). 6

10 bidder at the foreclosure sale, will own the property. This is sufficient to give MPI standing."5 The issue in Martin Properties, Inc. concerning MPI's standing to challenge the assignment is analogous to the issue in the instant case of whether Petitioner has standing to challenge the Trust's non-ownership (and thus standing) of the corresponding Note and Mortgage given the undisputed trust violations in evidence. The Third District Court conflicts with both Martin Properties, Inc. and General Development when it failed to reject the privity based standard for determining standing. Just as with MPI and the assignment, Petitioner is not a party to the trust documents and not a third party beneficiary thereof. However, and as the Fourth District Court pointed out, "that is not the test." Rather, having a "sufficient interest in the outcome of the litigation" --not "privity"-- is the standard. There simply is no way to harmonize or distinguish the Third District Court's holding from those in General Development and Martin Properties, Inc. As mentioned supra, while the facts in all three cases differ, the substantive rule of law involved in all three is premised upon Florida standing law. The Third District's holding in the instant case rejects four decades of precedent whilst 5 The Fourth District Court of Appeals in Martin Properties, Inc., 833 So. 2d at 827, quoted the Second District Court's explanation on standing in General Development Corp. that "Standing is, in the final analysis, that sufficient interest in the outcome of litigation which will warrant the court's entertaining it. It is beyond doubt that standing is, in most states, no longer determined by first determining some abstract question such as "privity.""

11 simultaneously setting a new standard incompatible with prior Florida law. As it currently stands (based on the Third District's opinion), no party has standing to challenge a trust's actions unless they are a third party beneficiary or party to a trust agreement. This notion is a revolution in Florida standing law. Just as it did with its prior Memorandum in Opposition to Petitioner's Motion for Rehearing, Respondent Deutsche Bank National Trust Company will undoubtedly claim a contrary position. Respondent will claim (as it previously has on appeal) in opposition to this jurisdictional brief that the Third District Court's opinion in the instant case does not conflict with General Development or Martin Properties, Inc. based upon the differing factual scenarios present in each individual case. The reality, however, is that any factual differences are irrelevant given that the central issue in each case hinges upon the determination of standing and how it is defined in Florida. Plainly, the Second District Court in General Development and the Fourth District Court in Martin Properties, Inc. apply a different test than the Third District Court decided to do in this case. The jurisprudential theme in all three cases boils down to one common and fundamental question of law: "what, under Florida law, is the standard for standing that a court should employ?" There is now clear, explicit, and direct conflict between district courts as to standing law and how it should be employed in Florida. Furthermore, Petitioner

12 feels that this Court should exert jurisdiction because the ruling in this case will have an effect on countless foreclosure cases across the state. As such, Petitioner humbly suggests that this Honorable Court exercise its jurisdiction pursuant to Florida Rules of Appellate Procedure and CONCLUSION There is a basis for conflict jurisdiction in this case. The Third District Court's ruling conflicts with the cited decisions of the Fourth and Second District Courts. The case should also be reviewed because, given that countless foreclosure cases across the state are effected by the instant appeal, review by the Florida Supreme Court is necessary to promote jurisprudential uniformity. For all of the reasons set forth above, this Honorable Court should grant Petitioner's request for review. [CERTIFICATE OF SERVICE, SIGNATURE, AND CERTIFICATE OF COMPLIANCE ON NEXT PAGE]

13 CERTIFICATE OF SERVICE THE UNDERSIGNED HEREBY CERTIFIES that a true and correct copy of this JURISDICTIONAL BRIEF has been delivered by U.S. Mail to Smith, Hiatt & Diaz, P.A., P.O. Box 11438, Fort Lauderdale, Florida , this day of Jimenez, Milian & Associates, P.L.L.C. PÓert R. Jimenez, Esq., Florida Bar No.: SW 32"d Ave Suite 110 Miami, FL Telephone: Fax: Counsel For: Petitioner Sandra P. Castillo CERTIFICATE OF COMPLIANCE THE UNDERSIGNED HEREBY CERTIFIES that this JURISDICTIONAL BRIEF of Petitioner, Sandra P. Castillo, complies with the font requirements set forth in Rule 9.210(a)(2), Fla. R. App. P.; to wit, Times New Roman 14-point font. R ert R. Jimenez, Esq. 10

14 APPENDIX

15 Mjirb Bigtrítt Court of Rppeal State of Florida, January Term, A.D Opinion filed June 6, Not final until disposition of timely filed motion for rehearing. No. 3D Lower Tribunal No Sandra P. Castillo, Appellant, VS. Deutsche Bank National Trust Company, etc., Appellee. An Appeal from the Circuit Court for Miami-Dade County, William L. Thomas, Judge. Jimenez, Milian & Associates and Robert R. Jimenez, for appellant. Smith Hiatt & Diaz, and Roy A. Diaz and Diana B. Matson (Fort Lauderdale), for appellee. Before WELLS, C.J., and SHEPHERD and ROTHENBERG, JJ. SHEPHERD, J.

16 The appellant in this case challenges the appellee's standing to bring a foreclosure action against the appellant, arguing the appellee, a common-law trust, failed to comply with its pooling and servicing agreement when it took possession of the original note and mortgage and thus the trust cannot legally be in possession of the note and mortgage when it was obtained in violation of its trust documents. Because the appellant is neither a party to nor a third-party beneficiary of the trust, we find the appellant lacks standing to raise this issue and affirm the final judgment of foreclosure in favor of the appellee, as the holder of the original note and mortgage. See In re Walker, No ELF, 2012 WL , *6-7 (Bankr. E.D. Pa. Feb. 13, 2012); In re Almeida, 417 B.R. 140, 149 (Bankr. D. Mass. 2009); see also Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010). Affirmed. 2