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Morales v. Fifth Third Bank

Florida Court of Appeals, Fourth District

July 3, 2019


         Not final until disposition of timely filed motion for rehearing.

          Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; David A. Haimes, Judge; L.T. Case No. CACE11012434.

          Paul Alexander Bravo, Ricardo R. Corona and Ricardo M. Corona of the Corona Law Firm, P.A., Miami, for appellants.

          Shaib Y. Rios and Michael W. Smith of Brock & Scott, PLLC, Fort Lauderdale, for appellee.

          WARNER, J.

         Appellant borrowers appeal from a final judgment on a promissory note entered in favor of the lender regarding the borrowers' default on a loan to buy an empty lot. Appellants argue, among other things, that the trial court erred by denying their motion for involuntary dismissal because the Bank failed to plead breach of a loan modification agreement. We agree, reversing and remanding for entry of involuntary dismissal.

         In 2005, appellants executed an adjustable rate note in the amount of $125, 000 in favor of the appellee, Fifth Third Mortgage Company. The beginning interest rate under the note was 7.875%. Appellants defaulted on the loan. In 2008, they entered into a loan modification agreement that changed the terms of the loan to a fixed interest rate of 6.5% and lowered their monthly payments. The parties agreed that the unpaid principal balance on the note was $120, 105.90.

         Appellants defaulted again, and in 2011, Fifth Third Bank, a separate entity from appellee and servicer of the note, filed suit to accelerate payment under the note. The complaint was amended a few times, and in the second amended complaint, appellee filed suit under its own name. Appellee attached a copy of the adjustable rate note to this complaint, but appellee neither mentioned the modification nor attached it to the complaint.

         The borrowers answered, listing as an affirmative defense that appellee failed to properly credit the borrowers' account with the collected payments. In reply, appellee filed a copy of the payment history on the note, but appellee again did not mention the modification. The payment history reflects the 2008 modification and decreased monthly payments on the note.

         Appellee unsuccessfully moved for summary judgment, attaching an affidavit in support of the motion showing the 6.5% interest rate under the modification. In connection with the motion, appellee filed the original adjustable rate note, as well as the 2008 modification that is signed by appellants and shows the fixed interest rate.

         After a continuance, the case proceeded to trial in 2017, where the court received into evidence a copy of the note, default letter, judgment figures, and payoff interest details. Final judgment was entered in favor of appellee, and the borrowers appealed. In Morales v. Fifth Third Mortgage Co., 238 So.3d 280 (Fla. 4th DCA 2018), we reversed and remanded for a new trial because the trial court violated the best evidence rule by admitting a copy of the note instead of the original.

         In 2018, the case again proceeded to trial, which led to the instant appeal. The trial court noted that the original note was filed and that the modification was attached to it. Appellee presented only one witness, an employee of Fifth Third Bank who worked as a litigation portfolio analyst. The witness identified the original, adjustable rate note. However, when appellee moved to enter the modification into evidence, the borrowers objected, arguing that appellee was required to amend its complaint to plead a theory of recovery under the modification. The court disagreed and allowed the modification into evidence. Appellee then moved the demand letter and payment history into evidence.

         The witness testified that the loan was in default, and no payments were made since 2009. During cross-examination by the borrowers, the witness stated that the amounts that appellee was seeking to recover were based on the modification.

         After appellee rested, the borrowers moved for involuntary dismissal. They contended, among other things, that appellee did not conform the pleadings to the evidence, that the modification upon which appellee relied was neither pled nor attached to the operative complaint, and that it would be error for the court to allow appellee to amend its complaint to conform to the evidence. Appellee responded that it was suing on the original note, and the modification was neither a negotiable instrument nor the operative document in the case. Appellee's counsel agreed with the court ...

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