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Deutsche Bank National Trust Co. v. Smith

Florida Court of Appeals, Fourth District

July 17, 2019

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for MORGAN STANLEY ABS CAPITAL I INC.TRUST 2006-NC3, Appellant,
v.
STEVE SMITH and ALTHEA SMITH, Appellees.

         Not final until disposition of timely filed motion for rehearing.

          Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Barry Stone, Judge; L.T. Case No. CACE 13-021846.

          Kimberly S. Mello and Vitaliy Kats of Greenberg Traurig, P.A., Tampa, for appellant.

          Samuel D. Lopez of Samuel D. Lopez, P.A., Pembroke Pines, for appellees.

          Damoorgian, J.

         Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2006-NC3 ("the Bank"), appeals the involuntary dismissal of its foreclosure action. We reverse.

         In September 2013, the Bank filed a foreclosure action against Steve and Althea Smith ("Borrowers") that also included a count to reestablish and enforce a lost note. Attached to the complaint was a copy of the lost note identifying New Century Mortgage Corporation as the original lender. The note contained no indorsements. The Bank also attached to its complaint two assignments of mortgage dated January 27, 2010. The first assignment showed that the mortgage together with the note was assigned from the original lender to Morgan Stanley Mortgage Capital Holdings ("Morgan Stanley"). A representative of HomEq Servicing signed the first assignment as attorney-in-fact for the original lender. The second assignment showed that the mortgage together with the note was assigned from Morgan Stanley to the Bank. The same HomEq representative signed the second assignment as attorney-in-fact for Morgan Stanley.

         In 2015, the Bank filed with the court another copy of the lost note. Unlike the copy attached to the original complaint, this copy contained an undated, special indorsement from the original lender to Morgan Stanley. There was also an allonge to the note which contained an undated, special indorsement from Morgan Stanley to the Bank.

         Borrowers answered the complaint and raised several affirmative defenses, including lack of standing and fraud on the court. Both of those defenses alleged that the assignments of mortgage attached to the complaint were fraudulent in that there was no accompanying power of attorney evidencing HomEq's relationship with the original lender.

         The matter ultimately proceeded to a bench trial where the Bank presented its case through the testimony of Sony Prudent ("the witness"), a senior loan analyst for the Bank's current servicer. Through the witness, the Bank introduced into evidence the copy of the note containing the series of indorsements ending in a special indorsement to the Bank. The witness testified that the original note could not be located despite a diligent search and that no other entity but the Bank was entitled to enforce the original note. The witness did not know when the indorsements were placed on the note.

         The Bank also introduced into evidence, without objection, certified copies of the two assignments of mortgage. The witness testified that the assignments predated the filing of the complaint and transferred Borrowers' mortgage and note from the original lender to Morgan Stanley and then from Morgan Stanley to the Bank. The witness further confirmed that the assignments reflected that HomEq, the servicer of the loan at the time the assignments were executed, was acting as attorney-in-fact for both the original lender and Morgan Stanley. The witness, however, had no documentation or personal knowledge as to whether HomEq had the authority to execute the assignments of mortgage.

         After the Bank rested, and without presenting any evidence of their own, Borrowers moved for involuntary dismissal on the basis that the Bank failed to prove that it was entitled to enforce the lost note. Specifically, Borrowers argued that by failing to introduce a power of attorney showing that HomEq was authorized to execute the assignments of mortgage, the Bank could not demonstrate a valid chain of transfers. After hearing argument on the issue, the court involuntarily dismissed the Bank's action for lack of standing pursuant to Bonafide Properties, LLC v. E-Trade Bank, 208 So.3d 1279 (Fla. 5th DCA 2017). This appeal follows.

         It is well established that "a plaintiff in a foreclosure action must establish its standing both at the time the complaint was filed and when judgment is entered." Spicer v. Ocwen Loan Servicing, LLC, 238 So.3d 275, 278-79 (Fla. 4th DCA 2018). One way a foreclosure plaintiff may establish standing is by proving that the borrower's note is lost and that the plaintiff is entitled to enforce the lost note pursuant to section 673.3091, Florida Statutes. ยง 673.3011(3), Fla. ...


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