The Fifth DCA recently affirmed entry of a final judgment in favor of the bank finding the mortgage foreclosure action was not barred by the statute of limitations even though the bank filed its complaint more than five years after the borrower defaulted on the loan. Velden v. Nationstar Mortg., LLC.[i]  In Velden, the bank filed a foreclosure complaint in July 2014 based on the borrower’s failure to pay the February 2009 payment and all subsequent payments. The borrower moved for an involuntary dismissal based on the five-year statute of limitations.[ii] The lower court tried the matter and entered a final judgment of foreclosure in favor of the bank for the full amount of the unpaid note, plus interest from January 2009. The borrower appealed the judgment asserting the lower court erred by not dismissing the complaint based on the five-year statute of limitations. In the alternative, the borrower argued the court erred in awarding the bank amounts which accrued beyond the five-year limitations period.

The Fifth DCA affirmed the entry of judgment based on the fact that the bank alleged and proved the borrower remained in default after missing the February 2009 payment. The Court explained:

“Because the Bank alleged and proved missed payments within the five years prior to the filing of its complaint, its action was not barred by the statute of limitations.” Velden, quoting itself in Klebanoff v. Bank of N. Y. Mellon[iii].

However, the Fifth DCA agreed with the borrower that the judgment should not include “amounts which accrued beyond the five-year limitations period.” The Court cited several Florida courts which reached the same conclusion.[iv] The Fifth DCA remanded the matter to the trial court with instructions “to exclude [from the judgment]…damages for any defaults that occurred more than five years prior to the filing date of the current lawsuit.”

However, there is indication that the law has not settled in this area and there is some judicial support for the position that the Florida Statute of Limitations does not exclude a future claim based on default of the subsequent month of that plead in the dismissed case.  Judge Lambert offered an insightful concurring opinion wherein he agreed entry of judgment was proper and he conceded the Court properly followed binding precedent when it limited the award of damages, but he noted:

“[I]f I were writing on a clean slate, I would not exclude these sums from the judgment and would affirm the final judgment of foreclosure for the entire balance owed on the thirty-year note at issue.”

Judge Lambert reasoned that the initial foreclosure lawsuit was dismissed without prejudice which placed the parties “back in their respective pre-acceleration positions.” He also noted:

that when the right to accelerate the debt for non-payment is optional with the

holder of the note, the statute of limitations does not run until the note is due.”

Judge Lambert concluded that forbearance of the right to accelerate does “not constitute a waiver or defense against future collection of all sums due and owing under the note” and the bank “should not be deemed to have waived or forfeited its right to have included in the final judgment of foreclosure those monies owed for non-payments on the note that are more than five years from the filing of the lawsuit based on the statute of limitations defense.”[v]

Judge Lambert’s concurring opinion is consistent with the concurring opinion in the Florida Supreme Court case of Bollettieri v. Bank of New York.[vi] Although Judge Lambert provided insightful and well-reasoned logic in his concurring opinion, the Fifth DCA’s opinion in Velden makes it clear that a bank seeking to foreclose and collect the full amount of the note should continue to file their complaint within five years of the initial default. As the issue evolves, it is reasonable to presume the Florida Supreme Court will eventually have the opportunity to consider adopting the concurring opinions into precedential law.

[i] 5D16-3628, 2018 Fla. App. LEXIS 359, 1-2 (5th DCA Jan. 12, 2018).

[ii]  § 95.11(2)(c), Fla. Stat. 2017.

[iii] Klebanoff v. Bank of N. Y. Mellon, 228 So. 3d 167,168-69 (Fla. 5th DCA 2017).

[iv] U.S. Bank, N.A. v. Diamond, 228 So. 3d 177, 178 (Fla. 5th DCA 2017); U.S. Bank National Association v. Bartram, 140 So. 3d 1007 (Fla. 5th DCA 2014); Kaan v. Wells Fargo Bank, 981 F. Supp. 2d 1271, 1274 (S. D. Fla. 2013); Greene v. Bursey, 733 So. 2d 1111 (Fla. 4th DCA 1999); Cent. Home Tr. Co. of Elizabeth v. Lippincott, 392 So. 2d 931 (Fla. 5th DCA 1991).

[v] Velden v. Nationstar Mortg., LLC, No. 5D16-3628, 2018 Fla. App. LEXIS 359, at *6 (5th DCA Jan. 12, 2018).

[vi]  See November e-Blast.