Florida Statute of Limitations Marches Toward Bartram
The Florida Statute of Limitations has undergone significant judicial review and scrutiny in recent years. On April 13, 2016 the Third District Court of Appeals reversed itself on an en banc review in Deutsche Bank Trust Co. Ams. v. Beauvais, case number 3D-14-575, in a five to four split decision. The issue before the Court involved the application of the Statute of Limitations in a foreclosure action in cases involving prior foreclosure actions that were unsuccessful. The Court’s initial decision held that a loan must be de-accelerated prior to a second action to foreclose when the first action to foreclose was filed more than five years prior.
In Beauvais, the Bank filed an action to foreclose on December 18, 2012 (“2012 Foreclosure”) based on the borrower’s failure to pay the installment payment due on October 1, 2006. Prior to this case the Bank’s predecessor-in-interest filed an action to foreclose on January 23, 2007 (“2007 Foreclosure”) seeking due to the borrower’s failure to pay the September 1, 2006 payment. Between the 2007 and 2012 Foreclosure title to the property changed by virtue of the condominium association acquiring title. The Association argued the 2012 Foreclosure was barred by the Statute of Limitations because the Bank failed to pursue foreclosure within five years of acceleration of the 2007 Foreclosure. The Trial Court Agreed.
The Appellate Court initially entered an opinion in favor of the Association. However, after an en banc review the Appellate Court reversed the Trial Court’s ruling. The Appellate Court joined its sister court’s and held that the Florida Supreme Court’s ruling in Singleton v. Greymar Associates was applicable to the Statute of Limitations analysis in holding that each successive default date can be viewed as a separate cause of action. This position is premised on the unique nature of a mortgage contract, which provides a borrower with the right to reinstate a defaulted mortgage after acceleration. This right essentially puts the power of the contract in the control of a borrower, which is unique to traditional contractual defaults.
Additionally, the Court removed the need to analyze whether dismissal with or without prejudice is a factor under the Statute of Limitations review. Lastly, the Court held that a Bank is not required to de-accelerate the loan prior to filing a second action to foreclose.
Beauvais did not solidify the issue as to whether the default date needs to be within five years from the second action to foreclose. In Beauvais the Bank’s 2012 Foreclosure was based on a default from October 1, 2006 – which was over five years from 2012 Foreclosure. Despite this fact, the Court held that “dismissal of a foreclosure action accelerating payment on one default does not bar a subsequent foreclosure action on a later default date if the subsequent default occulted within five years of the subsequent action.”
While the recent Beauvais opinion is extremely helpful in resolving the issue of Statute of Limitations, the opinion does not provide complete resolution. The requirement that the second case be filed “within five years of the subsequent action” is inconsistent with the facts of Beauvais. To make matters a little less clear, the Court also concluded that “[a]s a matter of law, the bank’s 2012 foreclosure action, based on breaches that occurred after the breach that triggered the first complaint, was not barred by the Statute of Limitations”, despite the fact the 2006 default date was outside five year period of the 2012 Foreclosure. Also, the 2012 Foreclosure was filed five years after acceleration in the 2007 Foreclosure.
The Court’s ruling in Beauvais appears to turn on the way the Bank plead the breach in the foreclosure complaint. The Court held, “[i]t is the fact that the bank alleged the failure to pay the October 1, 2006 installment payment ‘and all subsequent payments’ that makes the instant case fall within the rule as set out herein.” The highlighted language is critical to the analysis.
This appears to be a new factor for consideration and a split among Appellate Courts. The Fifth District Court of Appeals in Hicks v. Wells Fargo Bank held opposite regarding such language. Also, the First District Court of Appeals presented a variance in Nationstar Mortg. v. Brown, where the Court did not consider this “subsequent payment” language, but held that a second foreclosure based on a default of the next month is not barred by the Statute of Limitations.
The Florida Supreme Court is currently considering the Statute of Limitations issue in their review of the Fifth District Court of Appeal’s decision in U.S v. Bartram. This may bring some additional clarity to the current trend in the Florida Court’s to continue to uphold the Florida Supreme Court’s holding in Singleton allowing lenders to file second actions based on a different default date.