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What Does Florida’s New Summary Judgment Standard Mean For Lenders in Borrower Default Cases?
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What Does Florida’s New Summary Judgment Standard Mean For Lenders in Borrower Default Cases?

August 12, 2021 Banking & Financial Services Industry Legal Blog

Reading Time: 5 minutes

Lenders who move for summary judgment under Florida’s new summary judgment standard will likely enjoy more favorable outcomes. The court’s more rigorous review of attempts to withstand summary judgment will change expected litigation outcomes, impact litigation strategy, and largely benefits lenders.

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How Does Florida’s New Summary Judgment Standard Differ From Its Old Summary Judgment Standard?

 On December 31, 2020, the Florida Supreme Court changed Florida’s summary judgment. Florida’s old summary judgment standard compelled courts to grant summary judgment only if “no genuine issue as to any material fact” remained. The court considered the entire record and if there was the “slightest doubt” that a material issue remained, summary judgment was not warranted. Jones v. Dirs. Guild of America, Inc., 584 So. 2d 1057, 1059 (Fla. 1st DCA 1991).

Florida’s new summary judgment standard requires the evidence on the issue of fact be probative enough that a reasonable jury could find in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). In short, the new standard is less rigorous and requires an issue of fact be significant for the nonmoving party to survive summary judgment.

As a result, more cases will likely be resolved on summary judgment. Parties moving for summary judgment are more likely to succeed. Parties responding to summary judgment must meet a higher burden to proceed to trial. This is generally a good thing for banks due to the fact that most cases lenders litigate are, at their core, a simple payment dispute.

What Does Florida’s New Summary Judgment Standard Mean for a Lender When a Borrower Defaults on a Loan?

Lenders often turn to litigation when a borrower defaults on a loan to recover the outstanding balance.  The specific cause of action or affirmative defenses may vary widely in these otherwise largely uniform cases. The critical facts in borrower default cases are usually straightforward and may not be subject to dispute under the new summary judgment standard.

Borrower and guarantor default cases are great candidates for resolution on summary judgment, more so now that Florida’s adopted its new summary judgment standard. Previously, the summary judgment standard heavily favored proceeding to trial. The old summary judgment standard favored proceeding to trial so much so that, even when a guarantor’s affidavit that created the dispute of material fact preventing summary judgment was contradicted by the guarantor’s prior deposition testimony, summary judgment has been found improper. See Roach v. Totalbank, 85 So. 3d 574, 578 (Fla 4th DCA 2012).

It seems unlikely that, under the new, less rigorous summary judgment standard, a court would allow a contradictory statement to be the basis for withstanding summary judgment.  It does not seem a reasonable jury would find in favor of the nonmoving party on a key issue where the nonmoving party has contradicted themselves, thus summary judgment under the new standard would be likely. The application of the new standard is universal and thus, in many cases summary judgment under the new standard is clearly more likely.

How Does Florida’s New Summary Judgment Standard Impact a Lender’s Litigation Strategy?

Florida’s summary judgment rule is codified in Section 1.150, Florida Rules of Civil Procedure. Section 1.150(d) provides that upon a motion for summary judgment, even if a case is not fully adjudicated, the court “must ascertain, if practicable, what material facts exist without substantial controversy” and the litigation will proceed accordingly. Id. In other words, even if an entire case is not disposed of on summary judgment, certain findings of fact can still be established.

Under the new rule, these findings of fact are more easily established because the standard for disputing facts is more challenging under the law. This means even if a lender is unsuccessful in fully proving their case at summary judgment, moving for summary judgment can still benefit the lender by resolving facts in its favor. These resolved facts could include any one of the following: the loan is legitimate, the outstanding balance on the loan is correct, the borrower executed the loan, the borrower defaulted on the loan, the borrower received the funds, and/or the lender is entitled to damages. While any one of these findings may not dispose of the litigation, it will limit the scope of any ensuing litigation or trial and can increase leverage in settlement negotiations.

Ultimately, regardless of the substantive impact Florida’s adoption of the new summary judgment rule has on litigation or a court’s finding of fact, the new summary judgment standard will have a large impact on debtor default cases. The increased threat of summary judgment will affect mediations, settlement offers, and litigation outcome expectations. The change in Florida’s Summary Judgment Standard will likely result in more favorable settlements for lenders in default cases.

Florida’s New Summary Judgment Standard Benefits Lenders in Borrower Default Cases

Summary judgment is a useful tool for Lenders in borrower default litigation.  With Florida’s adoption of a new summary judgment standard, lenders can expect more favorable results and can leverage more favorable settlements.

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