Silent second Mortgage

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The Second District Court rejects the application of the limitation period to actions for limitation due to delay and "All subsequent payments".

L. Weeks S493, 2016 WL 6538647 (Fla. Nov. 3, 2016), the court was asked to comment on how Bartram would influence lenders' confidence in infringement writs made more than five years before enforcement proceedings were instituted following the rejection of a previous lawsuit. Florida's Second Circuit Court of Appeals responded precisely to this point in its statement in Desylvester v. Bank of New York Mellon, et al., suggesting that in the case of consequential foreclosures submitted after a previous writ was released, creditors do not have to submit a new infringement notice if the debtor has neglected to remedy the original forfeiture.

At Desylvester, the Second Circuit Court of Appeals confirmed the registration of a legally enforceable judgement in which the defendant filed a mortgage enforcement lawsuit on the same day as the non-performance asserted in a previous enforcement lawsuit, which included "all additional amounts due thereafter". "In accordance with the Bartram ruling, the Court confirmed in its statement that after the rejection of an earlier enforcement claim, a security right over real property creditor is not prohibited from bringing another claim based on a "separate and different" day of delay - which includes a borrower's continued state of delay - under the same grade and security right over real property.

The Bank of New York Mellon ("BONY") brought a lawsuit in November 2012 against John Desylvester and his spouse for enforcement of a 2005 bond and mortgage. The complainant claimed that the borrower was in arrears with its payment due on 1 October 2008 and'all back payments' and expedited the letter of credit by stating the total amount due and payable.

That first application was rejected and, although the minutes of the complaint remain silent as to whether the rejection was made with or without detriment, the Court of First Instance did not take into account the type of rejection when giving its report. Thereafter, in December 2014, Bany submitted another enforcement suit under the same mortgage commitment.

Like in the first complaint, Borrower Indemnity claimed that the borrower was in arrears with its due months on October 1, 2008 and "all arrears thereafter". "In their response and objections in the favor, the Borrower claimed that any claim filed on the day of delay, October 1, 2008, would expire after the five-year limitation period for mortgage enforcement measures under Florida Statutes § 95.11(2)(c).

As part of the benchmarking process, the testimony for BONY's mortgage service provider, SELECT Portfolio Servicing, Inc. attested that the proven course of payments showed that the borrower's last instalment was applicable to the instalment due on 1 September 2008, so that the borrower has since been in a state of arrears and the arrears have not been remedied.

Finally, the tribunal has issued a legally enforceable judgement in favour of Bany. By confirming the Court's judgement, the Second Circuit Appeals Tribunal confirmed that the Bartram order addressed this question of whether the limitation period prevents consecutive enforcement measures from asserting a mortgage charge on the basis of a persistent state of arrears.

Bartram's reasoning was cited by the Court, stating that "the rejection of the Bank's previous enforcement proceedings did not cause the limitation of actions in order to prevent the Bank's later enforcement proceedings due to discrete losses. "Here, the court's terminology refers to the continued state of arrears of the borrower as separated failures, according to which Bany can enforce its debt within the required five-year term.

This court further differentiated the immediate case from Florida's Third District Court of Appeal ruling in Collazo v. HSBC Bank USA, N.A., 41 Fla. L. Weekly D2315, 2016 WL 6246446 (Fla. DCA Oct. 13, 2016), noting that the claimant in Collazo has instituted an enforcement proceeding based on a single day of delay outside the limitation period.

Though the court in the case recognized that the original date of 1 October 2008 for delay exceeded the five-year deadline, the continued status of the borrower's arrears was adequate to assist BONY's enforcement suit. Bartram's involvement to determine that a date of delay within the five-year statute of limitations does not have to be expressly invoked in an enforcement suit if the plaintiff:

1. claims that the Mortgagor did not make "and all successive repayments due thereafter" at a specified time; and 2. may determine in court, by a certificate of fact, that the Term Loan is in a persistent state of arrears. Therefore, the incorporation of the term "and all subsequently due back payments" into a plaintiff's statement of defence claims that the debtors did not succeed in remedying a persistent shortfall.

In fact, this ruling was intended to mitigate the concerns of the mortgage officers, who rely on older infringement notes for credits in arrears since the initial note was issued. The Desylvester statement is also noteworthy in that it remains silent whether the definitive judgement in question on enforcement contained the full amount of outstanding capital and interest or whether the amount due was capped within five years of the second enforcement claim.

An examination of the publicly available definitive judgement seems to have calculated the definitive amount of the judgement in order to take into account interest accruing on the initial date of the infringement and not on the five-year preceeding to the reopened enforcement proceedings. Further examination of the pleadings lodged by both sides also shows that the amount of the judgement was not primarily in question.

In fact, the only debate held by both parties is confined to a brief reference to the Collazo Court's reluctance vis-à-vis the tribunal to re-calculate the amount of capital and interest due by ruling out any payment due more than five years before the start of the second enforcement action. Accordingly, it appears that the Second Circuit Appeals Tribunal would confirm rulings on the full amount of outstanding debts for enforcement based on persistent payment default.

In addition, this Statement expands on the Court's ruling at Bollettieri Resort Villas Condominium Ass'n v. Bank of New York Mellon, 198 So. 3d 1140 (Fla. 2d DCA 2016), which also found that a borrower in a continued state of arrears at the date of enforcement was adequate to meet the five-year limitation period, whether or not the original limitation period would be excluded.