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Florida Court Reverses Dismissal of Foreclosure Due to Mortgagee’s Generic Witness Disclosure

The Third District Court of Appeal, State of Florida, recently reversed the dismissal of a mortgage foreclosure action based on the mortgagee’s failure to provide the name of the corporate representative who was to testify at trial, holding that dismissal was an overly harsh sanction given that no prejudice was shown.

A copy of the opinion in Deutsche Bank Nat’l Trust Co. v. Perez, et al. is available at: Link to Opinion.

In October 2009, the trustee of a mortgage-backed securities trust sued to foreclose a mortgage on real property in Miami-Dade County, Florida. In October 2014, the case was set for trial.

The pretrial order required that the parties exchange witness lists showing the name and address of any non-expert witness to be called at trial. The order also warned that failure to “strictly comply” may result in sanctions.

The borrower failed to file a witness list altogether. The plaintiff mortgagee filed a witness list that contained a generic description of one witness — i.e., the corporate representative of the loan servicer — rather than the witness’ name.

At trial, when the plaintiff mortgagee announced that it was calling the corporate representative to testify, this time referring to him by his proper name, the borrower objected because he was not on the witness list.

In response, the plaintiff mortgagee explained that it did not know the exact name of the person who would testify when it filed its witness list and the borrower suffered no prejudice as a result, such that it should either be allowed to proceed or the case should be continued to mitigate any prejudice or harm.

The trial judge reasoned that the issue was not whether the borrower suffered any prejudice from the failure to list the witness’ name, but rather the plaintiff mortgagee’s failure to comply strictly with the pretrial order. It then struck the plaintiff mortgagee’s sole witness and dismissed the case based on the court’s inherent authority to enforce its orders.

The Appellate Court reversed because the trial court, in determining whether the testimony of an undisclosed witness should be excluded, failed to consider the factors required by the Florida Supreme Court in its decision in Binger v. King Pest Control, 401 So. 2d 1310 (Fla. 1981).

Binger requires a trial judge to consider prejudice or “surprise in fact” to the opposing party, the ability to avoid any resulting prejudice, whether the calling party acted in bad faith, and whether the efficient trial of the case will be disrupted. Under Binger, if the court concludes after considering these factors that allowing the undisclosed witness to testify will not substantially affect the fairness of the trial, the witness should be allowed to testify.

The Appellate Court found that the trial judge erred by refusing to consider whether the borrower would suffer prejudice by allowing the witness to testify.  While the plaintiff mortgagee did not strictly comply with the terms of the pretrial order, the borrower was aware that a representative of the plaintiff mortgagee would testify about the relevant business records produced during discovery. Moreover, the borrower never requested the identity of the witness or attempted to depose the witness during discovery.

Because the record failed to show any surprise in fact about the existence of the witness or the subject matter about which he would testify, the Appellate Court concluded the borrower did not suffer any prejudice, the plaintiff mortgagee’s witness should not have been precluded from testifying nor the case dismissed.

The Appellate Court explained that, although the trial court had the inherent authority to control its docket, that discretion must be exercised cautiously, particularly when the undisclosed witness is a party’s only witness at trial, because doing so would be “the legal equivalent of the death penalty” for the party’s case.

Because exclusion and dismissal in the case at bar was a punishment out of proportion to the magnitude of the offense, the order of dismissal was reversed and the case remanded.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.