The Second DCA recently granted rehearing on appeal so it could re-evaluate the evidentiary requirements a bank must meet to prove compliance with the notice provisions of the mortgage. Soule v. U.S. Bank National Association, as trustee for BNC Mortgage Loan Trust 2007-1 Mortgage Pass-Through Certificates, Series 2007-1. Initially, in Soule, the Second DCA affirmed entry of final judgment in US Bank’s (“the Bank”) favor, but upon consideration of the borrower’s motion for rehearing and another new Second DCA opinion [i] on the same topic, it withdrew its affirming opinion and ordered dismissal of the Bank’s foreclosure action.

In Soule the borrower filed affirmative defenses wherein it alleged the Bank failed to satisfy the notice requirements identified in the mortgage. Like most mortgages, the mortgage in Soule required the Bank send Soule written notice advising him of his default and providing an opportunity for Soule to cure the default before the Bank could initiate foreclosure proceedings. At the foreclosure trial, the Bank successfully introduced a copy of the demand letter into evidence and the court found the demand letter complied with the notice provisions of the mortgage. The Bank also proffered testimony from an employee of its servicer, Ocwen, that the demand letter was sent. Ocwen took over servicing from Chase and was the servicer at the time of trial. Chase serviced the loan at the time of default and prepared and mailed out the demand letter. The lower court found the demand letter and witness testimony sufficient to prove the Bank complied with conditions precedent.

During the foreclosure case on appeal and on rehearing, the borrower argued that the Ocwen employee lacked personal knowledge regarding the act of mailing the demand letter because Chase, not Ocwen, prepared and mailed out the letter. The Bank countered that the fact Ocwen boarded the loan from Chase proved the demand letter was sent because if “there was any indication that a breach letter hadn’t been sent” it would have raised a “red flag” and Ocwen would not have boarded the loan. The witness concluded since the demand letter was in Chase’s system, Chase had mailed the letter to the borrower. The Second DCA found this testimony insufficient to prove the demand letter was mailed pointing out that the witness failed to provide any testimony of “how anyone at Ocwen would know whether a default letter that was imaged into Chase’s system had or had not been mailed or what information might be in Chase’s file to indicate that a default letter had not been mailed.” The Court also noted the witness admitted she never worked for Chase and she was never trained in any of Chase’s procedures, including Chase’s document imaging procedure.

The Court then discussed its opinion in Spencer where it also found the bank’s evidence regarding mailing of the demand letter was insufficient to prove it satisfied conditions precedent. The Court pointed out the similarities in the two cases in that neither witness worked for the servicer that mailed out the demand letter and neither witness had personal knowledge of the prior servicer’s practices or procedures for preparing and mailing default letters. The Court remanded the matter for an involuntary dismissal on rehearing explaining that when it initially affirmed the final judgment in favor of the Bank there “was no law from this district on the issue of what foundational testimony was required to prove that a default letter had been mailed by a prior servicer.”

With its two recent decisions, the Second DCA has established the bank’s evidentiary burden for proving satisfaction of conditions precedent. Florida trial courts must abide by this precedent. At trial or on summary judgment, assuming the bank’s witness did not work for the entity that mailed the demand letter, the bank’s evidence must demonstrate that the witness or affiant is personally familiar with the mailing procedures of the entity that mailed out the demand letter. Supporting documentation regarding these procedures and/or evidence to proves mailing of the letter such as a return receipt, letter log or supporting affidavit from the entity which mailed the demand letter is recommended since a finding that the bank’s evidence is insufficient to prove conditions precedent will likely result in dismissal. See Soule; Spencer, 242 So. 3d at 1192–95.

[i] In April 2018, the Second DCA issued an opinion which addressed the same issue in Spencer v. DiTech Financial, LLC, 43 Fla. L. Weekly D720 (Fla. 2d DCA April 4, 2018). We discussed the Spencer decision in detail in our May 2018 e-Blast.