The First District Court of Appeal (1st DCA) recently held that the statute of limitations does not bar a second mortgage foreclosure action based on a subsequent default, regardless of whether the first case was dismissed with or without prejudice. The 1st DCA sided with the Bartram view upon on appeal currently to the Florida Supreme Court, and rejected the 3rd DCA Beauvais opinion leaving the 3rd DCA as the only district who has upheld a statute of limitations in foreclosure case. The Beauvais case is also on rehearing in the 3rd DCA currently.
The Browns defaulted on their mortgage in February of 2007 and the lender filed foreclosure which was dismissed without prejudice in October of 2007 when the bank’s counsel failed to appear at a case management conference.
In November of 2010, the plaintiff mortgagee sent a new notice of intent to accelerate based on the failure to pay the March, 2007 installment. The default was not cured and the bank filed a second foreclosure action in November of 2012.
The Browns raised the statute of limitations as an affirmative defense, arguing that the second action was barred because it was not filed within five years after the 2007 acceleration of the note. The trial court entered summary judgment in the Browns’ favor, holding that the second action was barred by the statute of limitations. The bank appealed.
On appeal, the First District held that the Florida Supreme Court’s holding in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004) controlled.
Singleton held that the failure to pay each installment was a separate default that “created a new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action,” finding it “irrelevant whether acceleration had been sought in earlier foreclosure actions.”
The 1st DCA observed that in the instant case, both the note and mortgage contained typical clauses “reflecting the parties’ agreement that the mortgagee’s forbearance or inaction do not constitute waivers or release [borrowers] from their obligation to pay the note in full,” and that such binding contractual terms are inconsistent with the trial court’s judgment.
In addition, the Court noted that it had previously held that “not even a dismissal with prejudice of a foreclosure action precludes a mortgagee ‘from instituting a new foreclosure action based on a different act or a new date of default not alleged in the dismissed action.’”
The 1st DCA found that the plaintiff mortgagee’s “assertion of the right to accelerate was not irrevocably ‘exercised’ within the meaning of cases defining accrual for foreclosure actions, when the right was merely asserted and then dismissed without prejudice.”
The Court concluded that “[a]fter the dismissal without prejudice, the parties returned to the status quo that existed prior to the filing of the dismissed complaint. As a matter of law, appellant’s 2012 foreclosure action, based on breaches that occurred after the breach that triggered the first complaint, was not barred by the statute of limitations.”
In so ruling, the 1st DCA admitted that its decision was contrary to the Third District Court of Appeal’s current holding in the Beauvais ruling, but reasoned that a federal district court recently refused to follow Beauvais because it is “contrary to the overwhelming weight of authority,” which the Beauvais court itself acknowledged. The 1st DCA also mentioned the rehearing in progress where that opinion may change.
Accordingly, the trial court’s judgment in favor of the homeowners was reversed and remanded for further proceedings.