The Third DCA recently reversed the lower court’s entry of summary judgment in favor of a non-borrower condominium owner, LHF Hudson (“Hudson”). Nationstar Mortgage LLC v. LHF Hudson, LLC, 3D18-443, 2019 WL 362057, at *1 (Fla. 3d DCA Jan. 30, 2019). Hudson acquired title to the property in January 2014 at a condominium foreclosure sale. Prior to that sale, the mortgagee, Nationstar, unsuccessfully accelerated its first mortgage lien. Nationstar filed a foreclosure action in 2008 against the original borrower based on a January 2008 payment default, but later dismissed that foreclosure. By the time Hudson purchased the property in 2014, Hudson believed Nationstar’s mortgage lien was unenforceable due to the five-year statute of limitations which (Hudson argued) began running in 2008 when the loan was first accelerated and continued to run until it expired in 2013.

Due to this belief, Hudson expended more than $80,000 on “rehabilitation and condominium association assessments,” but failed to cure the 2008 payment default on Nationstar’s mortgage.  Nationstar initiated a second foreclosure action in August 2015 naming Hudson as a defendant and alleging default of the note and mortgage based on Hudson’s failure to make the January 2008 payment “and all subsequent payments.” Hudson answered the complaint and asserted several affirmative defenses, only two of which the Third DCA addressed in its opinion.

Firstly, Hudson argued that Nationstar’s foreclosure was barred by the statute of limitations which expired in 2013 and that the Florida Supreme Court’s decision in Bartram v. U.S. Bank[i] “should not apply retroactively to revive Nationstar’s [foreclosure] claim.” Hudson also argued Nationstar was “estopped from enforcing the mortgage against Hudson because, at the time Hudson purchased the property, ‘the law was clear that the statute of limitations barred any further efforts to enforce the note and mortgage’” and it would be “inequitable to enforce [Nationstar’s] mortgage” under these circumstances. The Miami-Dade Circuit Court agreed and granted summary judgment in Hudson’s favor. Nationstar appealed.

On appeal, Nationstar argued the lower court erred when it entered summary judgment based on Hudson’s statute of limitations and estoppel defenses. Nationstar reasoned that precedential law established Nationstar had the right to foreclose based on the fact that Nationstar’s mortgage was an installment contract and based on the continuing nature of the default. Nationstar held a valid lien on the property and Hudson failed to cure the 2008 payment default. Hudson responded that Nationstar’s claim was “extinguished” as of May 2013, five years after Nationstar first chose to accelerate. Hudson argued that the extinguished claim could not be revived retroactively based on a “sea change in the law” by the Bartram and Beauvais[ii] decisions.

 The Third DCA rejected Hudson’s “extinguishment” argument and conclusion that there was a “change in the law.” The Third DCA explained “Bartram and Beauvais did not change the law in Florida regarding the application of the statute of limitations in foreclosure actions.” The Court relied on several Florida decisions which it found were consistent in holding that “the unique nature of the mortgage obligation and the continuing obligations of the parties in that relationship” necessitates that “each subsequent default accruing after the dismissal of an earlier foreclosure action creates a new cause of action…”

Finally, the Court concluded that Hudson’s estoppel defense lacked merit because it was based on Hudson’s mistaken “application of Florida law regarding the statute of limitations.” The Court further explained that Nationstar did not “mislead Hudson regarding the status of the note and mortgage”, so Hudson’s purchase of the property and expenditure of funds to pay the association assessments and improve the property could not be attributed to anything Nationstar did or did not do. Hudson could not establish any of the elements of its estoppel claim.

The Third DCA’s holding in Hudson is another welcome development in a long line of cases which have now firmly established the “limitations” to the statute of limitations in the foreclosure context. We anticipate future litigation based on the statute of limitation defense will dramatically decrease due to this decision.

[i] Bartram v. U.S. Bank, N.A., 211 So.3d 1009 (Fla. 2016).

[ii] Deutsche Bank Tr. Co. Americas v. Beauvais, 188 So. 3d 938, 940 (Fla. 3d DCA 2016).