In West Palm Beach, Florida, the Daily Business Review
- The Fourth District Court of Appeal  reversed a foreclosure judgment in a case that wasn't legally ready to be decided.
No default judgment was in place for U.S. Bank N.A., and one of the homeowners hadn't been served with the lawsuit when Broward Circuit Senior Judge Barry Stone(1) issued final judgment for the lender.
The appeals court ruled the case wasn't "at issue," or ready for disposition, when the trial court set the trial date or at the time of trial when Stone ruled against homeowner Frank Reilly.(2)
"It's been quite a scramble to keep up with all those abruptly set trials," Reilly's attorney, Kenneth Trent of Fort Lauderdale, told the Daily Business Review.
Foreclosure defense attorneys argued after the robo-signing scandal that Florida courts were improperly rushing to close foreclosure cases to clear crowded dockets.
In the unsigned decision, the unanimous panel threw out the 2014 foreclosure judgment in the bank's favor and remanded the case for further action.
"This will probably benefit a lot of people because Mr. Reilly is not the only one who's been in a position like this," Trent said. "It's a really good ruling and a good opinion for foreclosures because there has been a mad rush to set for trial all those cases that were hanging around on the dockets."
Reilly signed a promissory note and mortgage with his former wife, Mynabel Roche, before they defaulted on the loan and U.S. Bank sued to foreclose.
The bank served the foreclosure complaint on Roche but couldn't find Reilly. The lender claimed he was dodging process servers, so it served him by publication Dec. 3 and Dec. 10, 2013.
Before the second notice was published, Roche—but not Reilly—answered the complaint. Stone set the case for trial after Roche's filing, prompting Trent to argue the trial court denied Reilly due process.
On Jan. 2, 2014, in what would be his only filing in the case, Reilly requested an extension to respond to the complaint. Stone did not rule on that request but proceeded to trial Jan. 30, 2014.
Neither Reilly nor Roche attended, and Stone entered final judgment in the lender's favor.
That was reversible error, according to the appellate court.
"U.S. Bank did not obtain a default against Mr. Reilly. Nor did Mr. Reilly file an answer," Judges Martha Warner, Matthew Stevenson and Alan Forst wrote. "The action was not at issue either when the trial court set the trial date or when the trial itself was held."
The ruling did not impact Stone's final judgment against Roche. It also declined to rule on Reilly's challenge to the sufficiency of the bank's service by publication, saying the homeowner had not raised those issues before the trial court and could still argue them on remand.
The decision is in line with a Third District Court of Appeal case decided in 2014. The court reversed a foreclosure order in favor of Bank of New York Mellon on the issue of whether the case was ready for trial.
"The case was not at issue and therefore could not have been noticed for trial until 20 days after (BNY) filed its answer" to a defense counterclaim, Judge Edwin Scales wrote. "As we have previously held, failure to adhere strictly to the mandates of Rule 1.440 is reversible error."
Source: Appeals Court Reverses Premature Home Foreclosure
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For the court ruling, see Reilly v. U.S. Bank N.A.
, No. 4D14-867 (4th DCA, February 3, 2016).
No "ham and egger" here; Judge Stone is a retired Florida appellate court judge
who once sat on the 4th District Court of Appeal for over two decades, presiding as its chief judge from 1997-1999.
From the court ruling:
- Florida Rule of Civil Procedure 1.440 provides that a case may be set for trial when it is “at issue.” First, however, “[a]n answer must be served by or a default entered against all defending parties before the action is at issue.” Ocean Bank v. Garcia-Villalta, 141 So. 3d 256, 258 (Fla. 3d DCA 2014) (quoting Bennett v. Cont’l Chems., Inc., 492 So. 2d 724, 727 n.1 (Fla. 1st DCA 1986)).
Thus, where a defendant has not yet answered the complaint, and the plaintiff has failed to obtain a default, the action is not yet at issue. U.S. Bank Nat’l Ass’n v. Croteau, 40 Fla. L. Weekly D1237 (Fla. 4th DCA May 27, 2015).
U.S. Bank did not obtain a default against Mr. Reilly. Nor did Mr. Reilly file an answer. Therefore, the action was not at issue, either when the trial court set the trial date or when the trial itself was held. This is reversible error. See Tucker v. Bank of N.Y. Mellon, 175 So. 3d 305, 306 (Fla. 3d DCA 2014).
Accordingly, we reverse the final judgment of foreclosure as to Mr. Reilly and remand to the trial court for further proceedings consistent with the foregoing.