HSBC Bank USA, NA as Trustee, etc. v. Costel Serban

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA

HSBC BANK USA, N.A. as NOT FINAL UNTIL TIME EXPIRES TO
Trustee for Nomura Asset FILE MOTION FOR REHEARING AND
Acceptance Corporation Mortgage DISPOSITION THEREOF IF FILED
Pass-Through Certificates, Series
2005-AR5, CASE NO. 1D14-0022

Appellant,

v.

COSTEL SERBAN,

Appellee.

_____________________________/

Opinion filed October 23, 2014.

An appeal from the Circuit Court for Okaloosa County.
Keith Brace, Judge.

Donna Eng, Michael K. Winston, and Dean A. Morande of Carlton Fields Jorden
& Burt, P.A., West Palm Beach, for Appellant.

George M. Gingo and James E. Orth, Jr. of Gingo & Orth, P.A., Titusville, for
Appellee.

PER CURIAM.

HSBC Bank USA, N.A., as Trustee for Nomura Asset Acceptance

Corporation Mortgage Pass-Through Certificates, Series 2005-AR5 (“HSBC

Bank”), appeals the denial of its motion for continuance, made at trial, and the trial
court’s dismissal of the action without prejudice due to HSBC Bank’s failure to

appear at trial with a witness through which evidence might be presented to prove

its case. HSBC Bank contends that the trial court erred as a matter of law by

convening the trial before the case was “at issue” under rule 1.440(a), Florida

Rules of Civil Procedure; abused its discretion by denying the motion for

continuance; and abused its discretion by dismissing the action upon HSBC Bank’s

failure to comply with the court order setting the trial. Under the circumstances of

this case, the trial court committed no legal error by convening the trial as

scheduled and its rulings were not abuses of discretion. Accordingly, the order on

appeal is affirmed.

The proceedings were initiated by HSBC Bank on March 11, 2008, upon its

filing the complaint for foreclosure in circuit court. Attached to the complaint was

a copy of a note under which Mr. Costel Serban promised to repay a loan made by

Gateway Funding Diversified Mortgage Services. The note was secured by a

mortgage on real property. The last page of the note contained a blank

endorsement from Gateway Funding. See § 673.2051(2), Fla. Stat.

For five years, the case made little progress due to lengthy gaps between the

parties’ filings. When the trial court issued case management orders in 2013, the

litigation proceeded in earnest.

On August 13, 2013, the circuit court entered its Order Setting Non-Jury

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Trial for October 17, 2013. This provided the parties with 65 days’ notice of the

trial date and time, well in excess of the 30-days’ notice required by rule 1.440(c).

No doubt mindful of the age of the case, and consistent with the court’s

responsibility to manage its docket,1 the court’s order setting trial included an

admonition to counsel as follows:

3. The Plaintiff shall file all necessary documents as required by
the rules of court and be present and prepared on the date
indicated herein to resolve this case via Non-Jury Trial, failure
of either party to be prepared to resolve the case via Non-Jury
Trial may result in imposition of sanctions by the court against
the offending party to include dismissal of the action;

Plaintiff HSBC Bank raised no objection to the order at any time prior to the date

of trial.

On September 11, 2013, Mr. Serban moved for leave to amend his answer

and affirmative defenses and the court granted the motion on September 19, 2013.

The court directed HSBC Bank to file its reply within ten days, which time expired

September 30, 2013. Fla. R. Civ. P. l.190(a). HSBC Bank filed its Reply to the

Answer on October 2, 2013 and Reply to Affirmative Defenses on October 9,

2013. HSBC Bank did not request a continuance of the trial at this point.

Each party appeared through counsel at the trial as scheduled on October 17,

2013. Due to the amended answer and HSBC Bank’s latest reply thereto, there

was no question that the trial date was less than 20 days after HSBC Bank served

1
See Fla. R. Jud. Admin. 2.545.
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the “last pleading.” See Fla. R. Civ. P. 1.440(a). However, the status of the action

as “at issue” was not immediately challenged. Instead, the following exchange

between counsel for HSBC Bank and the court took place:

MR. McDONALD: Your Honor, as you know, I represent the
plaintiff, HSBC. And I’m the attorney that is assigned to try this case.
When you ask if the plaintiff is ready to proceed, the answer to
that is – plaintiff [ʼs] counsel is ready to proceed, Your Honor. I fully
prepared this case for trial, am fully prepared to try the case today.
However, unfortunately, I have to present the Court with a motion for
continuance.
THE COURT: I hope its not because of unavailability of
your bank witness, because I’m kind of getting wore out with those.
MR. McDONALD: Your Honor, I understand that. And it is
the unavailability of the witness.
Wells Fargo is the servicer, Your Honor. All of the Wells Fargo
witnesses are assigned out for other trials.
I have been begging and trying to get a witness for the case, and
the client has been trying to find somebody. But all of their witnesses
are assigned out, and they couldn’t have somebody here today, Your
Honor.

Counsel then argued that a continuance would be fair, in light of the court’s recent

acceptance of the amended answer and affirmative defenses. Counsel candidly

admitted to the court that he was notified “between seven and ten days ago” that no

witness for the plaintiff would be available. Counsel for Mr. Serban objected to

the request for continuance due to the time and expense incurred for counsel to

appear at trial and because HSBC Bank failed to show good cause for a

continuance.

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 The trial court found that HSBC Bank had ample notice of the trial and

sufficient opportunity to locate a qualified witness or even to train a witness during

the interim between the setting of trial and the trial date. When the court

announced its intention to deny the continuance, HSBC Bank’s counsel introduced

the argument that the amended answer and affirmative defenses “probably took the

case out of being at issue.” Counsel further argued that “the case was no longer at

issue, so the trial order for today actually would not be proper for setting the case

for trial today.”

The trial court rejected HSBC Bank’s rule 1.440(a) argument, finding that

counsel could have filed a written motion for continuance prior to the day of trial,

but waited until the parties and the court had assembled to seek a later trial date.

The court further found that the reason HSBC Bank could not put on its case as

scheduled was “not because of the amendment to the pleadings by the defendant;

it’s because the bank did not, after sufficient notice, have a representative here to

testify.” The court thus denied the continuance and, upon motion by the defense,

dismissed the action without prejudice pursuant to rule 1.420(b).

On appeal, HSBC Bank argues that rule 1.440(a), Florida Rules of Civil

Procedure, requires reversal of the trial court’s order because the rule prohibits trial

less than twenty days after service of the last pleading. HSBC Bank relies on

Precision Constructors, Inc. v. Valtec Construction Corp., 825 So. 2d 1062 (Fla. 3d

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DCA 2002) and Bennett v. Continental Chemicals, Inc., 492 So. 2d 724 (Fla. 1st

DCA 1986) for its position that strict compliance with rule 1.440(a) is required.

However, the “bright line approach” applied in Bennett is not applicable in all

cases.

In Parrish v. Dougherty, 505 So. 2d 646, 648 (Fla. 1st DCA 1987), this

Court clarified that “Bennett did not hold that in every case where the court fails to

issue an order setting trial, failure to comply with rule 1.440 is automatically

reversible error regardless of the circumstances.” The violation in Parrish was the

lack of a signed court order setting trial, as required by rule 1.440(c). This Court

held that this procedural requirement could be waived when the party appeared at

the scheduled trial and raised no objection to the method of setting the trial. In

contrast, Bennett involved violations of both rule 1.440(a) and 1.400(c) because

the trial was not set by a signed court order, the trial was held prior to the close of

the pleadings, and motions to dismiss certain pleadings were still pending. This

combination of procedural improprieties prompted reversal in that case.

Minor violations of rule 1.440 are insufficient grounds for reversal when it is

clear that no deprivation of due process resulted from the violation. For instance,

in Mourning v. Ballast Nedam Construction, Inc., 964 So. 2d 889 (Fla. 4th DCA

2007), the notice resetting the trial was mailed to Ballast by opposing counsel

rather than by the court. Ballast then failed to appear at trial, without explanation.

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The appellate court distinguished the technical violation of rule 1.440(c) from the

violations which occurred in Bennett and held that Ballast’s failure to appear, after

receiving notice of the trial, constituted a waiver. Rejecting a “bright-line rule,”

the court found “no due process implication if Ballast receives the order setting the

trial docket in a timely fashion and that order comes in a properly addressed

envelope sent through the U.S. mail by Mourning’s counsel. We fail to see the

logic in permitting Ballast to ignore the order and thereafter engage in ‘gotcha’

tactics to set aside the final judgment.” Mourning, 964 So. 2d at 893. The court

refused to “elevate form over substance” where, under the facts of the case, a strict

application of rule 1.440 “does nothing to advance the due process of law.” Id. at

894. Accordingly, the trial court’s order vacating the default judgment against

Ballast was reversed.

The effect of an amended pleading filed subsequent to an otherwise

compliant order setting trial under rule 1.440 was the issue in Labor Ready

Southeast Inc. v. Australian Warehouses Condominium Ass’n, 962 So. 2d 1053

(Fla. 4th DCA 2007). Like HSBC Bank in this case, the appellant in Labor Ready

argued that the amended pleading removed the case from “at issue” status under

rule 1.440(a) and required reversal of the final injunction order. The Fourth

District Court of Appeal disagreed, holding:

This is not a case where the case had never been at issue. This is
not a case where the parties did not have sufficient time to prepare.
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 This is not a case where anyone was prejudiced by the technical
amendment to the complaint. In situations where the parties have
received actual, timely notice of the trial, they are precluded from
arguing prejudice based upon a technical violation. See Abrams v.
Paul, 453 So. 2d 826, 829 (Fla. 1st DCA 1984).

“[R]ule 1.440 was designed as a safeguard for procedural due
process.” Grossman v. Fla. Power & Light Co., 570 So. 2d 992, 993
(Fla. 2d DCA 1990) (citing Parrish, 505 So. 2d at 647). “[R]eversal is
not required in every case where there has not been strict compliance
with rule 1.440. Rather, depending upon the circumstances, the
mandatory provision of the rule may be waived.” Id. (citing Parrish,
505 So. 2d at 647).

Labor Ready Se., 962 So. 2d at 1055-56. Noting that the case had been pending

for more than four years and that there was “no ambush or violation of the

procedural safeguards that Rule 1.440 was designed to protect,” the appellate court

found “no error in the trial court’s handling of this trial.” Labor Ready Se., 962

So. 2d at 1056.

HSBC Bank filed this case more than five years prior to the scheduled trial.

There was no question that the parties were notified of the trial date by the court’s

order entered August 13, 2013, more than sixty days before the trial date. The last-

minute amendment to the answer, to which plaintiff replied prior to trial, did not

prompt HSBC Bank to move for continuance immediately, to avoid wasted court

time and parties’ travel expenses. The trial court’s determination that the

amendment had no relation to HSBC Bank’s failure to supply a witness for trial

was reasonable. Under the circumstances of this case, the trial court’s proceeding

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to trial on the scheduled date, even though fewer than twenty days had passed

“after service of the last pleading,” did not deprive HSBC Bank of due process and

does not warrant reversal. Fla. R. Civ. P. 1.440(a).

In addition, the trial court’s denial of HSBC Bank’s motion for continuance

made at trial was not an abuse of discretion. See Garner v. Langford, 55 So. 3d

711, 714 (Fla. 1st DCA 2011) (decision to grant or deny motion to continue is

matter resting within the sound discretion of the court). HSBC Bank relies on

cases where the physical or mental condition of counsel or a party unexpectedly

prevented appearance at a scheduled trial. See Krock v. Rozinsky, 78 So. 3d 38

(Fla. 4th DCA 2012); Myers v. Siegel, 920 So. 2d 1241 (Fla. 5th DCA 2006).

Those cases list additional factors to be considered in determining whether a trial

court abused its discretion in denying a motion for continuance, including whether

denial will create injustice for the movant, whether the cause for the request was

“unforeseeable by the movant” and whether the opposing party would suffer any

prejudice as a result of a continuance.

The continuance sought in this case had no relation to any medical

emergency or other unforeseen event. Plaintiff’s counsel knew a week or more in

advance that his client would not be supplying a witness for trial. While rule

1.460, Florida Rules of Civil Procedure, acknowledges that a continuance may be

sought on grounds of nonavailability of a witness, continuances are generally

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disfavored and require a showing of good cause. Fla. R. Jud. Admin. 2.545(e)

(“All judges shall apply a firm continuance policy. Continuances should be few,

good cause should be required, and all requests should be heard and resolved by a

judge.”). No abuse of discretion is presented by the trial court’s determination that

HSBC Bank’s reason for failing to provide a witness for trial—the overscheduling

of its employees or representatives in other cases—did not constitute good cause

for a continuance.

HSBC Bank’s argument that a continuance would not cause Mr. Serban to

suffer any prejudice because he would simply continue to occupy the property

without payment on his loan until the eventual trial is unavailing. The prejudice to

Mr. Serban in this situation is the persistent lack of resolution of the allegations

against his property interests. HSBC Bank’s presumption that Mr. Serban is

enjoying possession of the real property at HSBC Bank’s expense is premature,

given HSBC Bank’s failure to present any proof of its allegations at trial, and in

particular any evidence to establish that HSBC Bank was entitled to enforce the

note as of the date the lawsuit was filed. In Gee v. U.S. Bank N.A., 72 So. 3d 211,

213 (Fla. 5th DCA 2011), in reversing summary judgment of foreclosure for the

plaintiff bank, the court noted:

Incredibly, U.S. Bank argues that “[i]t would be inequitable for
[Ms. Gee] to avoid foreclosure based on the absence of an
endorsement to [it].” But that argument flies in the face of well-
established precedent requiring the party seeking foreclosure to
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 present evidence that it owns and holds the note and mortgage in
question in order to proceed with a foreclosure action.

As the plaintiff, it is HSBC Bank’s burden to prove that it is the proper party to

enforce the note via maintenance of the foreclosure action. It must also present

evidence to support its claim of non-payment of certain monies owed to HSBC

Bank. Only then do the equities of any possession by the defendant borrower

become relevant. Because HSBC Bank failed to produce a witness for the

previously scheduled and noticed trial, the trial court did not abuse its discretion in

requiring HSBC Bank to suffer the consequence of its failure to produce any proof

of its case by denying a continuance.

Finally, the trial court’s dismissal of the action without prejudice, pursuant

to rule 1.420(b), was not an abuse of discretion. The order setting the trial date

specifically informed the parties of the consequences for failure to appear at trial

ready to resolve the case. While the trial court did not use the terms “willful” or

“dilatory tactics” in discussing HSBC Bank’s failure to produce a witness, the

court expressed its disapproval of the client’s apparent refusal to cooperate with

counsel to put on its case. As previously noted, the case had been pending for

more than five years and the court found no circumstances showing that HSBC

Bank’s failure to produce a witness for trial resulted from events beyond its

control. HSBC Bank has not demonstrated any abuse of the trial court’s discretion

in dismissing the case without prejudice.
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 For all the foregoing reasons, the order on appeal is affirmed.

VAN NORTWICK, CLARK, and SWANSON, JJ., CONCUR.

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