This action might not be possible to undo. Are you sure you want to continue?
BANK, FSB, PLAINTIFF, CASE NO.: lO-017782-CI-20
CHARLES JUTRAS and MELISSA JUTRAS, DEFENDANTS. ________________________________ DEFENDANT'S ~I
MOTION TO DISMISS AMENDED COMPLAQU
Defendants CHARLES JlJTRAS and MELISSA JUTRAS (hereinafter "Defendants"), by and through the undersigned counsel, respectfully files with this Court DEFENDANT'S
MOTION TO DISMISS AMENDED COMPLAINT, pursuant to Fla. R. Civ. P. 1.140(b)(6), and precedent case law, and in support thereof states: FACTS 1. This is an action for foreclosure of residential real property owned by the Defendants and other relief. 2. The named Plaintiff in this case is FLAGS TAR BANK, F.S.B. (hereinafter "Plaintiff'). The Plaintiff served its Amended Complaint on Defendants on or about March 7, 2012. 3. There are, however, two defects in the Plaintiffs Amended Complaint which proves fatal to its cause. The facts surrounding each defect are explained in detail below. Defect I - Failure to State a Cause of Action for Mortgage Foreclosure 4. The Plaintiffs failure to plead a cause of action is bundled up in: (1) its failure to plead
that it owns and holds the note and mortgage; or (2) adequately plead the requisit~ elements of
agency relationship between itself and the true owner of the debt.
5. With respect to ownership of the note and mortgage, it is imperative that this Court note the difference between Plaintiffs two causes of action. Count I of its Amended Complaint is an in personam action for monetary damages whereas Count II of the Amended Complaint is an in rem action for foreclosure of the mortgage. See SunTrust Mortgage v. Fullerton, 16 Fla. L.
Weekly Supp. l146b (6th Judicial Circuit, Pinellas County, October 2009). 6. In order to be granted the relief it seeks in Count II, the Plaintiff must be both the owner and holder of the subject mortgage. See e.g. Verizzo v. Bank of N.Y., 28 So. 3d 976,978 (Fla. 2d DCA 2010). 7. However, Plaintiff has only pled that it "holds" the mortgage and note; consequently it has failed to plead that it also "owns" the subject debt. 8. Moreover, if the subject note and mortgage is owned by someone other than itself, Plaintiff has failed to plead: (1) who this entity is and therefore acknowledgment by this party that Plaintiff will act for him or her, (2) Plaintiffs acceptance of the undertaking, and (3) control by the owner over the actions of Plaintiff. 9. Without such allegations, Plaintiff has failed to establish the requisite elements of an agency relationship which would allow it to sue in the true owner's name. 10. There, because Plaintiff has failed to allege that it either owns the note and mortgage or plead all requisite elements to establish an agency relationship, it is has failed to state a cause of action for foreclosure and its Amended Complaint should be dismissed. Defect II - Note is Not Negotiable 11. As an addition to, or in the alternative of, Defect I, the Amended Complaint should be dismissed because the subject note is non-negotiable and therefore Plaintiff cannot seek recourse pursuant to Fla. Stat. §673.3011.
12. In its general allegations, Plaintiff alleges that the subject note has been endorsed, pursuant to an allonge attached thereto, to it from the original lender. entitled to enforce the note and mortgage as a "holder" of same. 13. This discussion is only relevant if the note is a negotiable instrument. of the note, however, reveals that it is not. 14. Specifically, the subject note is not negotiable because it contains several instructions or undertakings other than the payment of money, to wit: a. The instruction that the borrower pay a late charge if the lender has not received payment by the end of fifteen calendar days after the date payment is due in clause 6(A); b. The instruction that the borrower to tell the lender, in writing, if borrower opts to may prepay in clause 5; c. The instruction that the lender send any notices that must be given to the borrower pursuant to the terms of the subject note by either delivering it or mailing it by first class mail in clause 8; and d. The instruction that the borrower send any notices that must be given to the lender pursuant to the terms of the subject note by either delivering it or mailing it by first class mail in clause 8. 15. Because the subject note is non-negotiable, Plaintiff cannot avail itself to §673, et seq. as to either Count I or Count II of its Amended Complaint. dismissed. Its pleading should therefore be A cursory glance Therefore, Plaintiff is
STANDARD OF REVIEW 16. "The purpose of a motion to dismiss is to ascertain if the plaintiff has alleged a good cause of action." Connolly v. Sebeco, Inc., 89 So. 2d 482 (Fla. 1956).
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION
I. The Plaintiffs Amended Complaint must be dismissed because of its failure to plead a cause of action a. Legal Standards 1. Standing, the Real Party in Interest, and Agency Law 17. Fla. R. Civ. Pro. 1.140(b)( 6) provides, in pertinent part, that "the following defenses may be made by motion at the option of the pleader. .. failure to state a cause of action ... A motion making any of these defenses shall be made before pleading if a further pleading is permitted." 18. Fla. R. Civ. Pro. 1.110(b) provides, in pertinent part, that "[a] pleading which sets forth a claim for relief. .. must state a cause of action and shall contain ... a short and plain statement of the ultimate facts showing that the pleader is entitled to relief." 19. Standing requires an entity have sufficient interest in the outcome of litigation to warrant the court's consideration of its position. Keehn v. Joseph C. Mackey and Co., 420 So.2d 398 (Fla. 4th DCA 1982). 20. Moreover, standing is a threshold issue. Peace RiverlManasota Regional Water Supply Authority v. IMC Phosphates, 18 So.3d 1079 (Fla. 2d DCA 2009); Hillsborough County v. Florida Restaurant Ass'n, Inc., 603 So.2d 587 (Fla. 2d DCA 1992); Miller v. Publicker
Industries, Inc., 457 So.2d 1374 (Fla. 1984). 21. Standing, however, includes not just the notion that the party has a "sufficient stake" in the outcome of the litigation but also that the party is in fact the "real party in interest." This is the "at least equally-important requirement that the claim be broughtby or on behalf of one ... 'in 4
whom rests, by substantive law, the claim sought to be enforced. '" Kumar Corp. v. Nopal Lines, Ltd., 462 So. 2d 1178, 1183 (Fla. 3d DCA 1985) (citing Author's Comment to Fla R. Civ. P. 1.210). 22. "The authority of an agent to bind a principal may be real or it may be apparent
only, and members of the public acting in good faith may rely on either, unless in the case of apparent authority the circumstances are such as to put a reasonable person on inquiry." Stiles v. Gordon Land Co., 44 So. 2d 417,421 (Fla. 1950). Bold emphasis added. 23. "The existence of an agency relationship is ordinarily a question to be determined by a jury in accordance with the evidence adduced at trial." Orlando Executive Park, Inc. v. Robbins, 433 So. 2d 491,494 (Fla. 1983). 24. An agent's "real" or "actual" authority arises out of expressed or implied manifestations of her principal. 1975). 25. "The essential elements of an actual agency relationship are: (1) acknowledgment by the principal that the agent will act for him or her, (2) the agent's acceptance of the undertaking, and (3) control by the principal over the actions of the agent." Robbins v. Hess, 659 So. 2d 424,427 (Fla. 1st DCA 1995) (citing Goldschmidt v. Holman, 571 So. 2d 422,424 n.5 (Fla. 1990)). 2. Standing in Foreclosure 26. "The party seeking foreclosure Actions See Taco Bell of California v. Zappone, 324 So. 2d 123, 123 (Fla. 2d DCA
must present evidence that it owns and holds the note
and mortgage in question in order to proceed with a foreclosure action." Lizio v. McCullom, 36 So. 3d 927, 929 (Fla. 4th DCA 2010). See also Verizzo v. Bank: of New York, 28 So. 3d 976, 978 (Fla. 2d DCA 2010) (providing that "there is a genuine issue of material fact as to whether the Bank of New York ~ and holds the note and has standing to foreclose the mortgage.")
27. Indeed, where the defendant denies that the party seeking foreclosure has an ownership interest in the mortgage, the issue of ownership becomes an issue the plaintiff must prove. Carapezza v. Pate, 143 So.2d 346,347 (Fla. 3d DCA 1962). 28. The standing requirement that the foreclosing party must both own and hold the mortgage is in accordance with Fla. R. Civ. Pro. Form 1.944. 29. This is because "Itlo grant ral judgment of foreclosure in favor of the [plaintiffJ, the trial court would have to find, among other things, that the [plaintiff! owned the mortgage and had performed all conditions precedent, if any to enforce the mortgage." Dykes v. Trustbank Sav., FSB, 567 So. 2d 958,959 (Fla. 2d DCA 1990). Bold emphasis added. b. Argument 30. Here, while the Plaintiff has made an allegation that it is the holder of the subject note and mortgage, it has failed to make any allegation that it is in fact the owner of same. 31. The failure of the Plaintiff to allege, in the body of its pleading that, in addition to holding the subject note and mortgage, it also owns these instruments prohibits it from asserting the proper chain of ownership of the instruments from their inception. 32. This distinction is important because, as noted in paragraph 5, supra, Count
Amended Complaint is a cause of action in equity to foreclose a mortgage and not an action at law for enforcement of the note. 33. Consequently, and pursuant to Form 1.944, Plaintiff must allege it is both the owner and holder of the note and mortgage. 34. As an alternative to such an allegation, Plaintiff may allege the requisite elements of an agency relationship between itself and the true owner in order to state a cause of action. This, however, Plaintiff has not done.
is and therefore
acknowledgment by the principal that Plaintiff will act for him or her, (2) Plaintiff's acceptance ofthe undertaking, and (3) control by the principal over the actions of Plaintiff. 36. Consequently, Plaintiff has failed to state a cause of action for mortgage foreclosure. Amended Complaint should therefore be dismissed. II. In addition to, or as an alternative of, Argument I, Plaintiff's Amended Complaint must be dismissed because the subject note is not negotiable a. Legal Standards
37. Issues regarding the negotiability of a mortgage promissory note appear to be rarely brought before trial courts' attention. Therefore, both trial and appellate courts in this State
generally have not had the opportunity to consider these issues on their merits. 38. Indeed, in a recent law review article published in the Pepperdine Law Review, Professor Dale Whitman identified only forty-two cases decided over the past twenty years in the entire United States in which a decision was "reached on the merits" regarding the negotiability of a mortgage note. See Dale A. Whitman, How Negotiability Has Fouled Up the Secondary
Mortgage Market, and What to Do About it, 37 Pepp. L. Rv. 737 (2010). 39. Even more shocking, Professor Whitman identified only two of those forty-two cases in which a "the court provide [d] a thorough analysis of the negotiability of the note!" 754. 40. Tracing the case law backwards in Florida, it appears that an analysis of mortgage notes was first articulated by the Fifth District in American Bank of the South v. Rothenberg, 598 So. 2d 289 (Fla. 5th DCA 1992). See Id. at
41. There, the Court stated that "the rights of the parties must be determined by the character of the promissory note. In this case, the promissory note meets the requirements of section 673.1 04, Florida Statutes (1991) and is thus a negotiable instrument." emphasis added. 42. Thus, the Rothenberg Court articulated a crucial first step in the analysis of a mortgage promissory note: a decision of whether the character of the note at issue is that of a negotiable instrument. 43. Unfortunately, more recent appellate decisions have not mentioned this essential first step, most likely because the character of the promissory note was not questioned at the trial court level. See e.g. Taylor v. Deutsche Bank National Trust Company, 44 So. 3d 618, 622 (Fla. 5th DCA 2010) (merely providing that "a promissory note is a negotiable instrument" without any consideration as to how a promissory note is in fact negotiable); Riggs v. Aurora Loan Services, LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010) (providing that "[t]he note was a negotiable instrument subject to the provisions of Chapter 673, Florida Statutes (2008)"); ~ v. Fairbanks, 888 So. 2d 725, 727 (Fla. 5th DCA 2004) (stating that "[a] promissory note is clearly a negotiable instrument within the definition of section 673.1 041 (1)" without providing an analysis ofthe statute). 44. The Second District has engaged in an examination of the negotiability statute and its application in the context of a retail installment sale contract (hereinafter "RISC"). See inter alia discussion regarding GMAC v. Honest Air. Because the nature of a RISC is similar to that of a mortgage promissory note in that both contracts require installment payments over a period of time, the analysis engaged by the Second District in Honest Air is applicable here. Id. at 29l.
45. In any event, when the character of the mortgage promissory note is questioned at the trial court level, the gratuitous assertion that "the note is a negotiable instrument" should not be accepted at face value. Rather, courts should first examine the note at issue to determine whether the note at meets the strict and technical definitions of "negotiable instrument" found in Florida's Uniform Commercial Code. ii. Definition of Negotiable Instrument
46. Fla. Stat. §673.1 041 (1) provides the statutory definition of a negotiable instrument. 47. The statute begins by asserting that an instrument is negotiable if it is "an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order." 48. In addition, the instrument must also meet the three following prerequisites: a. First, the instrument must be "payable to bearer or to order at the time it is issued or first comes into possession of a holder." §673.1041(1)(a); b. Second, the instrument §673.1041(1)(b); and c. Third, the instrument mu:;t not "state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money." §673.1041(1)(c).! Bold emphasis added. 49. For purposes of this motion, the third prong of the definition is of vital importance because, as Professor Whitman has stated, "The standard note form approved by Fannie Mae and
I §673.1 041 (1)( c) does provide three exceptions to the general rule that the promise or order must not contain any instruction or undertaking other than the payment of money. These exceptions are: (1) an undertaking or power to give, maintain, or protect collateral to secure payment; (2) an authorization or power to the holder to confess judgment or realize or dispose of collateral; and (3) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
must be "payable on demand or at a definite time."
Freddie Mac for use in one-to-four-family
residential loans is 1,455 words in length in three
pages without signatures, and notes used in loans on commercial properties are commonly several times that size." Whitman at 743. 50. Inextricably imbedded within those 1,455 words are a host of undertakings and
instructions by the person promising or ordering payment to do some act in addition to the payment of money. 51. By the clear statutory definition once one promise or undertaking is found, the character ofthe note cannot said to be negotiable. 52. Finally, if the note is not a negotiable instrument, it is not subject to transfer or enforcement pursuant to Fla. Stat. §673, et seq. 53. Stated another way, the act of endorsing and transferring a mortgage promissory note is a nullity because endorsement and delivery only effectuates a transfer of a negotiable instrument. If an instrument is non-negotiable, it must be transferred pursuant to general contract law. iii. GMAC v. Honest §673.1041(1)(c) Air and the exclusionary language of
54. In GMAC v. Honest Air Conditioning & Heating, Inc., 933 So. 2d 34 (Fla. 2d DCA 2006), the Second District concluded that ''the trial court erred in finding that the [retail installment sales contract] was a negotiable instrument." Id. at 35. 55. There, the Court was confronted with a RlSC entered into between GMAC and Honest Air for the purchase of an automobile. Id. 56. The Court noted that the RlSC created certain instructions or undertakings in both the "person promising" to pay and the creditor ordering payment, including: (1) an instruction onto the debtor to not remove the vehicle from the United States; (2) an instruction onto the debtor to reimburse advances made by the creditor in payment of repair or storage bills; and (3) an 10
instruction onto the creditor to dispose of the collateral in certain ways following repossession. Id. at 37. 57. Most notable to our purposes here, the Second District noted that the RISe
required the debtor to pay fees for late payment or dishonored
58. Ultimately, the Second District held that these obligations "bring the RISC within the exclusionary language of section 673.1 041 (1)(c), which provides that a negotiable instrument 'does not state any other undertakings' in addition to the payment of money." Id. 59. The Court reasoned that this must be so because "[aJ negotiable instrument should be 'simple, certain, unconditional, and subject to no contingencies. must be a courier without luggage.'" (Fla. 1926)). b. Argument 60. In addition to, or in alternative of, argument I, supra, Plaintiffs must be dismissed because the subject note is not a negotiable instrument. may not invoke Fla. Stat. §673, et seq. in an attempt to "enforce" the note. 61. The note is not negotiable because it contains several instructions or undertakings other than the payment of money brining the note within the exclusionary language of Amended Complaint As a result, Plaintiff As some writers have said, it
Id. (citing Mason v. Flowers, 91 Fla. 224, 107 So. 334,335
§673.1 041(1)( c). 62. To begin, the purported note provides for "late charges." Such charges were considered
obligations other than the payment of money which rendered the RISC in GMAC, supra, nonnegotiable. 63. Moreover, the note also contains the following additional obligations:
1. The instruction that the borrower to tell the lender, in writing, if borrower opts to may prepay in clause 5; 2. The instruction that the lender send any notices that must be given to the borrower pursuant to the terms of the subject note by either delivering it or mailing it by first class mail in clause 8; and 3. The instruction that the borrower send any notices that must be given to the lender pursuant to the terms of the subject note by either delivering it or mailing it by first class mail in clause 8. 64. These obligations render the purported note non-negotiable. Because the note is non-
negotiable, the Plaintiff cannot claim that it is entitled to enforce it pursuant to Fla. Stat. §673 .30 11 as the holder of a negotiahle instrument. 65. Therefore, Plaintiffs Amended Complaint must be dismissed. CONCLUSION WHEREFORE, based upon the foregoing, the Defendant respectfully request this Court dismiss Plaintiffs Amended Complaint, award attorney's fees to the Defendants pursuant to Fla. Stat. §57.105(7) and the subject loan documents for such fees so wrongfully incurred by the necessity of this defense, and any other relief the Court deems just and proper. other relief the Court deems just and proper.
CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U.S. Mail on this '~ay of March, 2012 to Howard M. Camerik, Esq., Attorney for Plaintiff,
Gray Robinson, P.A., 401 East Las Olas Boulevard, Suite 1850, Ft. Lauderdale, FL 33301. By:~-f/.3~ Michael P. Fuino, Esq. Matthew D. Weidner, P.A. Attorney for Defendants 1229 Central Avenue St. Petersburg, FL 33705 (727) 894-3159 FBN: 84191
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.