Last month the Fifth DCA receded from its two prior opinions wherein it held the statute of limitations prevented a lender from recovering damages in a foreclosure action “for defaults that occurred more than five years prior to the filing date of the lawsuit.” Grant v. Citizens Bank, N.A. In Grant, the borrower (“Grant”) defaulted on his note and mortgage in May 2009 and the bank filed its third foreclosure action against him in November 2015. Grant relied on the statute of limitations to argue the bank was prevented from “collecting any amounts due on the note and mortgage” which accrued more than five years before the bank filed its third foreclosure action.

After a trial on the merits, the lower court entered judgment in favor of the bank and at the bank’s request “awarded interest back to May 2009, a date more than five years prior to the filing of the foreclosure action.” Grant appealed the final judgment to the Fifth DCA and raised two arguments:

  • Grant’s first argument was that the lower court erred by awarding interest from May 2009 because the five-year statute of limitations barred such relief.
  • Grant’s second argument was that the bank failed to request such relief in its pleadings, which only sought interest from November 1, 2010, and the issue was not tried by consent, so the court could not grant interest from May 2009.

On appeal, the Fifth DCA affirmed the bank’s final judgment in part. It reversed that portion of the judgment which awarded interest from May 2009 due to the bank’s failure to plead entitlement to such relief in its complaint.

Notably, the Court explained the bank would have been entitled to interest from May 2009, more than five years from the filing of the complaint, had the bank properly requested such relief in its complaint. The Court also acknowledged that its affirmance of the final judgment was contrary to its previous holdings in Velden v. Nationstar Mortgage, LLC and U.S. Bank, N.A. v. Diamond, where the court applied the statute of limitations to “installment obligation cases.”

The Fifth DCA explained it was receding from its prior decisions and adopting the Florida Supreme Court’s logic and holdings in Bartram and Bollettieri. In those cases, the Florida Supreme Court explained that a bank’s option to accelerate payments due under a note and mortgage did not trigger the application of the statute of limitations to prevent a subsequent foreclosure based on subsequent defaults. The Fifth DCA, relying on that logic, pointed out the note in Grant gave the bank the optional right to accelerate for non-payment so the statute of limitations was not triggered by the two prior foreclosure actions which the bank dismissed. The Court concluded that forbearance did “not constitute a waiver or defense against future collection of all sums due…under the note” even though the bank opted to accelerate the loan more than five years after Grant’s initial payment default.

The fact the Fifth DCA explained the bank’s damages would not be limited to those incurred within five years of filing its complaint (had the bank pled such relief) is significant. The holding in Grant resolved an inter-district conflict on this issue so now the Second DCA (Bollettieri), the Third DCA (Gonzalez v. Fed. Nat’l Mortgage Ass’n,) and Fifth DCA all agree that the bank’s damages in foreclosure cases will not be limited to those accruing within five years of filing the complaint.

Due to the lack of an inter-district conflict on this issue, all Florida trial courts are now bound to follow Grant. The Florida Supreme Court previously established that:

“the decisions of the district courts of appeal represent the law of Florida unless and until they are overruled by this Court…Thus, in the absence of inter-district conflict, district court decisions bind all Florida trial courts.” Pardo v. State.

The Florida Supreme Court recognized the conflict between the districts regarding the applicability of the five-year statute of limitations was resolved in Bollettieri when it declined to review the case: “After further consideration…we have determined that the certified conflict has been resolved, and we conclude that we should exercise our discretion and decline review.” Bollettieri

The Grant holding should curtail future litigation regarding the applicability of the statute of limitations in the foreclosure context.