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The Bank of New York Mellon v. Beaufort

Florida Court of Appeals, Third District

December 13, 2017

The Bank of New York Mellon, etc., Appellant,
Samuel C. Beaufort, et al., Appellees.

         Not final until disposition of timely filed motion for rehearing.

         An Appeal from the Circuit Court for Miami-Dade County No. 14-1350, Jorge E. Cueto, Judge.

          Marinosci Law Group, P.C. and Donna Evertz (Fort Lauderdale), for appellant.

          Evan M. Rosen (Fort Lauderdale), for appellees.

          Before ROTHENBERG, C.J., and SALTER and LUCK, JJ.

          SALTER, J.

         The Bank of New York Mellon ("BNYM") appeals a final order of involuntary dismissal in favor of defendants/borrowers Samuel Beaufort and Audrey Horne-Beaufort (the "Borrowers") in this residential mortgage foreclosure case. At the close of a non-jury trial, the circuit court dismissed the complaint based on BNYM's "failure to prove standing as of the time the case was filed." We reverse and remand.

         Facts and Procedural History

         In September 2013, as BNYM prepared to commence the foreclosure action in circuit court, an assistant vice president for Bank of America, N.A. ("BANA"), signed the possession certificate required by section 702.015(4), Florida Statutes (2013), and Florida Rule of Civil Procedure Form 1.944(a). The officer certified that BANA was BNYM's loan servicer and attorney in fact, and that BNYM was in possession of the original promissory note through BANA, "which possesses the note on behalf of [BNYM]." The verified complaint was filed in January 2014.

         A copy of the promissory note in the principal amount of $228, 000.00 (executed January 19, 2007) and companion mortgage were attached to the verified complaint. The copy of the note indicated that it was originally issued to Countrywide Home Loans, Inc., and had been endorsed in blank. After the denial of their motion to dismiss the complaint, the Borrowers filed an answer and affirmative defenses. The first affirmative defense, captioned "Standing, " alleged that BNYM was not "1) the holder of the note, 2) a nonholder in possession who has the rights of a holder, or 3) a person not in possession who is entitled to enforce the instrument pursuant to Florida Statute §673.3091 or Florida Statute §673.4181(4), at the time the lawsuit was filed, therefore [BNYM] does not have standing to bring this action."[1]

         The case proceeded to non-jury trial in August 2016. BNYM presented a single witness, Ms. Braithwaite. Ms. Braithwaite testified that she worked for "Ditech, " the servicing entity for the note and mortgage at issue in the foreclosure suit. She identified a power of attorney between Ditech and BNYM authorizing Ditech to act on behalf of BNYM, "including foreclosure, " and the power of attorney was admitted into evidence.

         Ms. Braithwaite testified that she had reviewed the business records pertaining to the loan, including copies of the promissory note, the mortgage, the payment history, the notice of defaults, the assignments of mortgage, and "the overall servicing file." Counsel for the Borrowers stipulated to the admission of the note and mortgage into evidence. After Ms. Braithwaite identified the default notice, proof of delivery, and payment history, and testified that these were business records maintained in the ordinary course of Ditech's business, counsel for the Borrowers interposed various objections, which were overruled, and then agreed to address those objections during cross-examination rather than a voir dire. As to the payment history, Ms. Braithwaite also testified that the payment records were made "at or near the time of occurrence by someone with knowledge, " and that the payment history reflected "the same amount that's alleged in the complaint as due and owing." She testified that the amount due and sought in damages as of the date of trial was $268, 137.34.

         During further cross-examination by counsel for the Borrowers, Ms. Braithwaite testified that she started working with Ditech (known previously as "Green Tree Servicing") in June 2014, and Ditech started servicing the loan in December 2013. She testified that she worked remotely (in South Florida) but out of the Jacksonville, Florida, office of Ditech.

         Ms. Braithwaite admitted that, although she had access to "input notes" into the payment history, she did not personally receive payments or input the information into the system. She also testified that data from the prior servicer was incorporated into Ditech's records through the "boarding" process.[2] Ms. Braithwaite testified that "boarding" involves not just transferring data from one loan servicer to another, but also includes "the process of vetting that data to make sure it's accurate and reliable before it is then incorporated into the new servicer's business records." During the extended cross examination, she described the process by which a composite of the loan servicing and information technology departments work with a prior servicer, review "the policies and procedures of the prior servicer to ensure that they're in conformity with the industry standards" and also in conformity with the acquiring servicer's policies and procedures. Once those steps have been completed, "the transfer of data starts to occur. Once we receive the information from the prior servicer, it's loaded into our test environment. From the test environment, it's reviewed for accuracy, reliability, the accounts are balanced to make sure the proper methodology is being ...

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