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Fla. App. Court (3rd DCA) Holds Payment Defaults More Than 5 Years Old Not Recoverable

The Third District Court of Appeal, State of Florida, recently reversed a final judgment of foreclosure because the plaintiff mortgagee alleged the same payment default as the basis for its prior 2008 and 2014 foreclosure actions.

The Third DCA held that on remand the trial court should calculate the correct amount owed for principal and interest, excluding installments that became due more than five years prior to the filing of the second foreclosure action, in accordance with its en banc ruling in Deutsche Bank Trust Co. Americas v. Beauvais.

A copy of the opinion in Collazo v. HSBC Bank USA, N.A. is available at: Link to Opinion.

A mortgagee sued to foreclose its mortgage in 2008, but the case was dismissed without prejudice for failure to comply with a court order. The mortgagee filed a second foreclosure action in 2014, more than five years after the original default in payment and more than five years after the original acceleration of the loan balance.

The trial court entered a final judgment of foreclosure in the mortgagee’s favor and the borrowers appealed, arguing “that final judgment must be reversed because of the expiration of the five-year statute of limitations applicable to the mortgage note.”

On appeal, the Third DCA cited its en banc ruling in Beauvais, and the Fifth District Court of Appeal’s ruling in U.S. National Assn. v. Bartram, both of which essentially held that “the five-year statute of limitations does not bar a second foreclosure suit filed on a subsequent payment default occurring within the five-year statutory period preceding commencement of the second suit.”

The Third DCA then found, however, that because the mortgagee relied upon the same payment default and “basis for acceleration in both the 2008 and 2014 complaints …” the final judgment for foreclosure in this action must be reversed and the case remanded for the trial court “to determine the correct sum of principal and interest due under the mortgage note calculated by excluding monthly installment payments due over five years before the commencement of the second foreclosure suit by [the mortgagee].”

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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.

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