Trials & Litigation

Top Fla. Court to Hear Landmark Foreclosure Fraud Case This Week Despite Parties' Agreed Dismissal


A hard-fought Florida mortgage foreclosure case seemingly had concluded—twice.

After the defendant homeowner contended that a mortgage assignment relied on in the complaint was fraudulent, the Bank of New York filed a voluntary dismissal of the suit.

Then, when the Bank of New York filed a second, identical foreclosure case five months later, relying on a purported mortgage assignment dated after the dismissal of the first suit, the homeowner, Roman Pino, sought sanctions in both cases. The dispute made it to the state’s 4th District Court of Appeal before the parties agreed to settle and dismiss the appellate case.

But in a divided December ruling (PDF), the state supreme court ordered the parties to proceed with the appeal, noting that Pino had already filed his initial appellate brief on the merits. The high court found that it still had discretion to decide, despite the dismissal of the appeal, the power of a trial court to address claimed fraud on the judicial system concerning a case that had already been dismissed, especially when such fraud could potentially extend far beyond the instant matter.

“The question certified to us by the Fourth District Court of Appeal in this case transcends the individual parties to this action because it has the potential to impact the mortgage foreclosure crisis throughout this state and is one on which Florida’s trial courts and litigants need guidance,” the supreme court wrote. “The legal issue also has implications beyond mortgage foreclosure actions. Because we agree with the Fourth District that this issue is indeed one of great public importance and in need of resolution by this court, we deny the parties’ request to dismiss this proceeding.”

Now the state’s top court is about to hear oral arguments in a landmark case that could not only determine the authority of a trial court to award sanctions in a previously dismissed matter but, banking and title company trade associations contend, devastate the state’s real estate market and lending industry, according to accounts of the case by Duane Morris and the Palm Beach Post.

Already deluged with foreclosure cases, the state real estate market would be even more chaotic if property ownership was called into question and cases had to be relitigated because of alleged past misconduct concerning already resolved cases, the trade groups argue. Meanwhile, would-be homeowners could find it impossible to get mortgages and clear title because of the uncertainty.

However, expecting lenders to file court cases based on accurate documents isn’t unreasonable, law professor Robert Jarvis of Nova Southeastern University tells the Post.

“Will it be devastating? That’s an argument the bankers have been saying all along, and it’s ridiculous,” he stated. “All anyone is saying is that bankers need to get their paperwork in order.”

Although Pino’s most recent settlement with the bank is confidential, a satisfaction of mortgage was filed five months before the state supreme court agreed to review the case, which originated in Palm Beach County Circuit Court, the newspaper notes.

Additional coverage:

ABAJournal.com: “Top Fla. Court to Address High-Profile Foreclosure Case Based on Inaccurate Loan Documents”

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