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Florida: State Court Ruling that Standing is Not Transferable (After Suit is Filed) is Reversed by Appellate Court

Posted By USFN, Tuesday, February 13, 2018
Updated: Monday, February 12, 2018

February 13, 2018

by Roy A. Diaz
SHD Legal Group, P.A. – USFN Member (Florida)

A Florida appellate court reversed a final judgment, which had been entered in favor of a borrower in a foreclosure action based on the bank’s alleged lack of standing. [US Bank, NA as Legal Title Trustee for Truman 2012 SC2 Title Trust v. Glicken, 2017 Fla. App. LEXIS 15541 (Fla. 5th DCA Oct. 27, 2017).]

The original plaintiff (Wells Fargo) filed a one-count foreclosure complaint against the borrower; copies of the note, allonge, and mortgage were attached to the complaint. The allonge attached to the note (and the complaint) contained a blank indorsement from the original lender. While the foreclosure was pending, Wells Fargo “assigned the mortgage and transferred possession of the note to US Bank.” The lower court entered an order substituting US Bank as the party plaintiff. US Bank filed the original note, allonge, and mortgage with the trial court. The note and allonge were identical to the copies attached to the complaint. The case proceeded to trial and, at the close of evidence, the borrower sought an involuntary dismissal of the case, asserting that US Bank lacked standing.

The defendant contended that US Bank lacked standing at the time of trial because no evidence had been admitted showing that Wells Fargo assigned the note, not just the mortgage, to US Bank. The lower court agreed (to the extent that it found US Bank lacked standing) and dismissed the bank’s foreclosure, holding:

“Standing is not transferrable and US Bank was not the holder of the note as of the date of the filing. It wasn’t the attorney enact [sic] of the—Wells Fargo. It wasn’t a successor in interest, it wasn’t purchased by, there was no way in which the two entities became one entity. There are a number of ways in which this happens, it evolves [sic] in a variety of lawsuits we see. In this case, you cannot transfer by selling the note. You cannot transfer standing. My ruling here is for the defendant.”

The lower court entered a final judgment in favor of the borrower, and an appeal on behalf of US Bank was filed in the Fifth District Court of Appeals (Fifth DCA).

Appellate Review
The Fifth DCA reversed the ruling, explaining that the lower court erred in its findings regarding standing. The appellate court pointed out that the note is a negotiable instrument and, once indorsed in blank, it can be transferred by possession alone; neither an assignment of the note nor evidence of an assignment is necessary if a party has actual possession of the original, endorsed note. The Fifth DCA concluded that US Bank presented sufficient evidence of its standing to foreclose when it attached the note and allonge with a blank indorsement to the foreclosure complaint, and then proffered the identical note and allonge at trial.

As stated in the appellate court’s decision, “When the note with an undated blank indorsement has been attached to the original complaint, this is sufficient to prove standing provided that the plaintiff produces the original note at trial or files it with the trial court with the same indorsement and there are no subsequent contradictory indorsements.”

Editor’s Note: The author’s firm represented the appellant, US Bank, NA as Legal Title Trustee for Truman 2012 SC2 Title Trust, in the subject case.

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