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A Primer on What Lenders Need to Know About Foreclosure Appeals in Florida
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A Primer on What Lenders Need to Know About Foreclosure Appeals in Florida

June 28, 2021 Banking & Financial Services Industry Legal Blog

Reading Time: 12 minutes


In Florida, a lender initiates a foreclosure by commencing a lawsuit in the county where the property is located. If the lender is successful, the lender will receive a final judgment of foreclosure from the court and the property will be sold at a public auction. If the borrower fails to timely file a motion for rehearing, or a motion for rehearing has been denied, the unsuccessful borrower can appeal the final judgment of foreclosure. Regardless of whether a lender was successful or unsuccessful in their foreclosure lawsuit, it is important for lenders to know about the appeal process in Florida.

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If the Lender Was Unsuccessful, Should It Appeal?

Sometimes, a lender’s foreclosure lawsuit will be dismissed. A lawsuit can be dismissed “with prejudice” or “without prejudice.” A lawsuit that is dismissed “with prejudice” means that the plaintiff cannot file the lawsuit again; on the other hand, “without prejudice” means that the plaintiff can file the lawsuit again.

Luckily for lenders, Florida courts have held that even if the foreclosure lawsuit was dismissed with prejudice, the lender can file a new foreclosure action, if it is based on a different act or a new date of default that was not alleged in the previous foreclosure lawsuit. See Bartram v. U.S. Bank Nat. Ass’n, 211 So. 3d 1009, 1020 (Fla. 2016) (holding that dismissal of earlier foreclosure action, whether with or without prejudice, did not bar subsequent foreclosure action based on a new default); Evergrene Partners, Inc. v. Citibank, N.A., 143 So. 3d 954, 955 (Fla. 4th DCA 2014) (holding that foreclosure based on an earlier default does not bar subsequent actions based upon different events of default); Singleton v. Greymar Assocs., 840 So. 2d 356, 356 (Fla. 4th DCA 2003) (holding that each new default presented a separate cause of action for foreclosure).

Therefore, if a lender’s foreclosure lawsuit is dismissed, lenders will likely be able to commence a new foreclosure lawsuit against the same borrower, so long as its based on separate defaults. Accordingly, if a borrower subsequently fails to make loan payments, a lender will be able to file a new foreclosure lawsuit instead of having to go through the appeal process.

Can a Final Judgment of Foreclosure Be Appealed?

Yes, a final judgment of foreclosure can be appealed. Once the timeframe for filing a motion for rehearing has passed, or a motion for rehearing has been denied, a final judgment of foreclosure is a final and appealable order. L.A.D. Prop. Ventures, Inc. v. First Bank, 19 So. 3d 1126, 1127 (Fla. 2d DCA 2009) (“A judgment of foreclosure is a final order”).

If the unsuccessful borrower files a motion for rehearing, the final judgment of foreclosure will not be considered final and appealable until the trial court rules on the rehearing motion. The unsuccessful borrower must file and serve a motion for rehearing within 15 days of entry of the final judgment of foreclosure. Fla. R. Civ. P. 1.530(b). A foreclosure sale cannot occur while a motion for rehearing is pending. Hoffman v. BankUnited, N.A., 137 So. 3d 1039, 1039 (Fla. 2d DCA 2014). If the unsuccessful borrower does not file a motion for rehearing within this short 15-day period, the borrower can appeal the final judgment of foreclosure.

In addition, the scheduling of a foreclosure sale pursuant to a valid final foreclosure judgment, “is a purely administrative, interlocutory step in the judicial sales process,” and therefore, is neither an appealable final order nor an appealable non-final order. Venezia v. Wells Fargo Bank, 258 So. 3d 539, 541 (Fla. 3rd DCA 2018). Therefore, the borrower can only appeal the final judgment of foreclosure, not the scheduling of the foreclosure sale.

What Is the Appeal Process?

An appeal is commenced by filing a “notice of appeal” with the trial court within 30 days of entry of the final judgment of foreclosure.  Fla. R. App. P. 9.110(b). If a notice of appeal is not filed within this timeframe, the foreclosure judgment cannot be reviewed by an appellate court. Bryant v. Wells Fargo Bank, N.A., 182 So. 3d 927, 929 (Fla. 3rd DCA 2016) (holding the appellate court lacked jurisdiction over appeal from final judgment of foreclosure because the appeal was filed more than 30 days after judgment was entered).

Once the notice of appeal is filed, the trial court is divested of jurisdiction to proceed with matters related to the final judgment of foreclosure. The trial court, however, retains the power to enforce the final judgment of foreclosure, unless the party appealing the final judgment of foreclosure (the “Appellant”) requests a stay pending the appeal and posts a bond. The trial court has discretion to grant, modify, or deny such relief. See Mann-Stack v. Homeside Lending, Inc., 982 So. 2d 72, 73-74 (Fla. 2d DCA 2008); Fla. R. App. P. 9.310(a). Therefore, unless the borrower obtains a stay from the trial court, the foreclosed property can still be sold during the pendency of the appeal.

The clerk of the trial court will forward the notice of appeal to the appellate court. Within 50 days of filing the notice of appeal, the clerk of the trial court will prepare a “record of appeal” and serve copies of the index on all parties to the appeal. Fla. R. App. P. 9.110(d). Within 120 days of filing the notice of appeal, the clerk will electronically transmit the record to the appellate court. Id. The record of appeal will contain all the original documents, pleadings, exhibits, and transcripts used by trial court in the foreclosure lawsuit.

Both parties will be required to serve and file appellate briefs. The Appellant is required to serve and file their initial brief within 70 days of filing the notice of appeal. Fla. R. App. P. 9.110(f). The party responding to the appeal (the “Appellee”) is required to serve and file their answer brief within 30 days after being served with the Appellant’s initial brief. If the Appellant has a reply, the Appellant must serve and file their reply brief within 30 days after being served with the Appellee’s answer brief. Fla. R. App. P. 9.210(f).

An oral argument before the appellate court may be permitted. A party may request an oral argument in a separate document and serve it within 15 days of serving their last brief. The court may, on its own motion or on motion of a party, require, limit, expand, or dispense with oral argument. If an oral argument is permitted, each side will be allowed 20 minutes. Fla. R. App. P. 9.320.

What Are the Standards of Review On Appeal?

When an appellate court reviews a lower court’s decision, it must articulate a standard of review. Florida law requires Appellants to include the appropriate standard of review in its initial appeal brief. Fla. R. App. P. 9.210(b)(5). The standard of review serves two functions: “it informs the parties of the extent of the review and, most important, reminds the appellate court of the limitations placed on its own authority by the appellate process. North Fla. Women’s Health & Counseling Servs., Inc. v. State, 866 So. 2d 612, 626 (Fla. 2003). Failure to apply the correct standard of review “may tilt the appellate playing field and irreparably prejudice a party’s rights.” Id.

An Appellant’s reason for appealing a trial court’s decision will usually be based on one of the following categories: (1) there was an error of law; (2) there was an error of fact; (4) there was a mixed error of law and fact; and/or (3) the lower court abused its discretion. Each category confers on the appellate court a different standard of review.

Error of Law

If the reason for appeal is an error of law, the standard of review is “de novo,” meaning the appellate court will review the case “from the beginning.” The appellate court will afford no deference to the lower court’s decision. This is because an appellate court is in the same position as a lower court to decide a question of law. A de novo standard is most used to review a question of law arising from undisputed facts.

For example, if a lender received a final judgment of foreclosure on a motion for summary judgment, the appellate court will apply the de novo standard. In addition, if the borrower files an appeal based on the lender’s lack of standing to bring a foreclosure lawsuit, the appellate court will “review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.” State Tr. Realty, LLC v. Deutsche Bank Nat. Tr. Co. Americas, 207 So. 3d 923, 925 (Fla. 4th DCA 2016).

Error of Fact

If the reason for appeal is an error of fact, the appeal court will review the lower court’s findings to determine whether they are supported by “competent and substantial evidence.” An appellate court does not rehear evidence presented at trial; therefore, the appellate court will afford substantial deference to the lower court’s findings of fact.

For example, if a lender receives a final judgment of foreclosure after a nonjury trial, the appellate court will review the trial court’s findings of fact “with a presumption of correctness and [the lower court’s findings] will not be disturbed unless they are clearly erroneous.” Id.

Mixed Error of Law and Fact

Sometimes, the reason for appeal may be based on a mixed error of law and fact. In this case, the trial court’s findings of fact are reviewed under the “competent and substantial evidence” standard, and the trial court’s application of the law to the facts is reviewed under the “de novo” standard. MTGLQ Inv’rs, L. P. v. Moore, 293 So. 3d 610, 615 (Fla. 1st DCA 2020).

Abuse of Discretion

 If the reason for appeal is because the lower court abused its discretion, the appellate court will afford a high degree of deference to the lower court’s ruling. The “abuse of discretion” standard of review provides the most deference to the trial court’s rulings. The appellate court will usually apply this standard when the trial court’s ruling was based on procedure, admissibility of evidence, or equity.

For example, if a borrower appeals the trial court’s decision to not set aside a judicial foreclosure sale, the appellate court will apply the “abuse of discretion” standard in reviewing the trial court’s decision. Aparicio v. Deutsche Bank Nat’l Tr. Co., 278 So. 3d 814, 816 (Fla. 3rd DCA 2019).

Why Are Final Judgments of Foreclosure Overturned on Appeal?

While there are many reasons a foreclosure can be overturned on appeal, the most common reason a final judgment of foreclosure is overturned on appeal is because the plaintiff lacked standing to foreclose at the time the lawsuit was filed. If the plaintiff is not the original lender, it may establish standing to foreclose “by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.” McLean v. JP Morgan Chase Bank Nat. Ass’n, 79 So. 3d 170, 179 (Fla. 4th DCA 2012). If the plaintiff contends that its standing to foreclosure derives from an endorsement, the plaintiff must show that the endorsement occurred before filing the foreclosure lawsuit. Similarly, if the plaintiff relies on an affidavit that proves the plaintiff’s status as the holder of the note, the affidavit must indicate that the plaintiff was the owner of the note and mortgage before the lawsuit was filed, or the affidavit must be executed before the lawsuit was filed and state that the plaintiff is “the owner and holder of the note.” Id. at 174.

Regardless of the evidence provided to establish standing, the evidence must establish that the plaintiff had standing at the time the lawsuit was filed. See Jeff-Ray Corp. v. Jacobson, 566 So. 2d 885 (Fla. 4th DCA 1990) (holding that the plaintiffs did not have standing because the lawsuit was filed four months before the note was assigned); Cutler v. U.S. Bank Nat’l Ass’n, 109 So. 3d 224, 226 (Fla. 2d DCA 2012) (reversing final judgment of foreclosure because the plaintiff, who was not the original lender, failed to present evidence establishing when the plaintiff became the proper holder of the note).

For example, in McLean, the Fourth District Court of Appeal reversed the final judgment of foreclosure because Chase Bank did not have standing to foreclose at the time the lawsuit was filed. In this case, Chase bank filed an affidavit in support of summary judgment, however, the affidavit was dated after the lawsuit was filed, and the affidavit did not indicate that Chase Bank was the owner of the note before the lawsuit was filed.

As another example, in Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 311 (Fla. 2d DCA 2013), the Second District Court of Appeal reversed the final judgment of foreclosure because Wells Fargo Bank did not establish standing to foreclose when it filed the lawsuit. In this case, Wells Fargo argued that it established standing by submitting the original note endorsed in blank. However, Wells Fargo did not submit the original note until several months after it filed the foreclosure complaint. The court noted that Wells Fargo was required to submit evidence that it was in possession of the original note with the blank endorsement at the time it filed the complaint.

Therefore, to avoid a final judgment of foreclosure being overturned on appeal, lenders should ensure that they have standing to foreclose prior to filing a lawsuit. If the foreclosing plaintiff was not the original lender, it must make sure it has proper evidence to establish that it had standing to foreclosure prior to filing the lawsuit.

Conclusion

Navigating the appeal process in Florida can be complex. If a lender has been served with an appeal of a final judgment of foreclosure, the attorneys at Jimerson Birr can help.

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