Mario A. Rodriguez and Lendy Rodriguez v. Wells Fargo Bank, N.A. d/b/a America's Servicing Company

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

MARIO A. RODRIGUEZ and LENDY RODRIGUEZ,
Appellants,

v.

WELLS FARGO BANK, N.A., d/b/a AMERICA'S SERVICING
COMPANY,
Appellee.

No. 4D14-100

[October 14, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Howard Harrison, Senior Judge; L.T. Case No.
502010CA001392XXXXMB.

Brian Korte of Korte and Wortman, P.A., West Palm Beach, for
appellants.

Dean A. Morande and Michael K. Winston of Carlton Fields Jorden
Burt, P.A., West Palm Beach, for appellee.

CIKLIN, C.J.

Mario and Lendy Rodriguez (“the homeowners”) appeal a final judgment
of foreclosure entered in favor of Wells Fargo Bank, N.A. d/b/a America’s
Servicing Company (“the bank”), contending that the bank failed to
establish standing to foreclose. We agree and reverse.

The bank brought a foreclosure action against the homeowners in 2010
alleging it was “the holder of the Mortgage Note and Mortgage and/or is
entitled to enforce the Mortgage Note and Mortgage.” The copy of the note
attached to the complaint was not indorsed.

Prior to trial, the bank filed the original note in the court registry, which
contained an indorsement in blank. At trial, the testimony of the bank’s
witness established that the bank was the servicer of the note and that the
bank had possessed the original note since 2007. The trial court denied
the homeowners’ motion for involuntary dismissal of the action based on
the bank’s lack of standing and entered final judgment for the bank.
 On appeal, the homeowners argue that standing to foreclose was not
demonstrated because the bank failed to prove that it had authority to
pursue the action as the servicer of the note. The bank counters that it
demonstrated standing to foreclose through evidence that it possessed the
note prior to the filing of the complaint.

‘“We review the sufficiency of the evidence to prove standing to bring a
foreclosure action de novo.’” Tremblay v. U.S. Bank, N.A., 164 So. 3d 85,
86 (Fla. 4th DCA 2015) (quoting Lacombe v. Deutsche Bank Nat’l Trust Co.,
149 So. 3d 152, 153 (Fla. 1st DCA 2014)).

“A crucial element of any mortgage foreclosure proceeding is that the
party seeking foreclosure must demonstrate that it has standing to
foreclose” at the time the complaint is filed. McLean v. JP Morgan Chase
Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). ‘“[T]he person
having standing to foreclose a note secured by a mortgage may be either
the holder of the note or a nonholder in possession of the note who has
the rights of a holder.’” Wells Fargo Bank, N.A. v. Morcom, 125 So. 3d 320,
321 (Fla. 5th DCA 2013) (quoting Deutsche Bank Nat’l Trust Co. v. Lippi,
78 So. 3d 81, 84 (Fla. 5th DCA 2012)).

‘“The Florida real party in interest rule, Fla. R. Civ. P. 1.210(a), permits
an action to be prosecuted in the name of someone other than, but acting
for, the real party in interest.’” Elston/Leetsdale, LLC v. CWCapital Asset
Mgmt. LLC, 87 So. 3d 14, 17 (Fla. 4th DCA 2012) (quoting Mortg. Elec.
Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007)).
A servicer that is not the holder of the note may have standing to
commence a foreclosure action on behalf of the real party in interest, but
it must present evidence, such as an affidavit or a pooling and servicing
agreement, demonstrating that the real party in interest granted the
servicer authority to enforce the note. See id. (“[A] servicer may be
considered a party in interest to commence legal action as long as the
trustee joins or ratifies its action.”) (emphasis omitted); see also Russell v.
Aurora Loan Servs., LLC, 163 So. 3d 639, 643 (Fla. 2d DCA 2015) (reversing
final judgment of foreclosure where servicer failed to adduce evidence of
predecessor’s authority to bring suit).

Because the bank was the servicer of the note and it brought the action
in its own name, it was required to prove that it had authority to commence
the foreclosure action. Although the bank established that it possessed
the note at the time the complaint was filed and it filed the original note
indorsed in blank, the record does not demonstrate when the blank
indorsement was placed on the note. The bank therefore failed to prove

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that it had standing as the holder of the note when it commenced the
action. Further, the bank failed to prove that it was a nonholder in
possession of the note with the rights of a holder. The bank introduced no
power of attorney, pooling and servicing agreement, or other evidence to
show that the real party in interest authorized it to bring the action.
Consequently, the bank failed to prove it had standing to enforce the note.

Pursuant to Florida Rule of Civil Procedure 1.420(b), “[a]fter a party
seeking affirmative relief in an action tried by the court without a jury has
completed the presentation of evidence, any other party may move for a
dismissal on the ground that on the facts and the law the party seeking
affirmative relief has shown no right to relief.” Accordingly, the
homeowners are entitled to an involuntary dismissal of the action, and we
reverse and remand for the trial court to enter such an order.

In light of our reversal, the remaining issue raised by the homeowners
is moot.

Reversed and remanded with instructions.

TAYLOR, J., concurs.
CONNER, J., concurs specially with opinion.

CONNER, J., concurring specially.

I concur with the majority opinion, but I write to address an area of
foreclosure law regarding standing that I contend has become imprecise,
and thus, somewhat unclear.

With some regularity in foreclosure actions, the complaint alleges, as
in this case, that the plaintiff has alternative statuses as a “holder” of the
note and a nonholder in possession with the rights of a holder, using some
combination of words to allege that status. The homeowners argue that
the case law has clearly held the two statuses are mutually exclusive; to
have standing to enforce a note, one must be either a holder or a nonholder
in possession with the rights of a holder, but one cannot be both. We are
unaware of any case which makes such a definitive holding. Instead, the
case law recognizes that standing can at times be “very complex” because
“the ways to allege standing to foreclose on a note are many and often very
complex.” Wells Fargo Bank, N.A. v. Bohatka, 112 So. 3d 596, 602 (Fla.
1st DCA 2013); see also Jelic v. LaSalle Bank, Nat’l Ass’n., 160 So. 3d 127,
129 (Fla. 4th DCA 2015) (commenting on “the various ways a plaintiff can
establish standing”).

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 Due to plaintiffs frequently alleging alternative statuses for standing,
the case law regarding standing in foreclosure cases has at times been
somewhat imprecise, in large part because the cases do not always focus
on and analyze the dual core elements of standing.1 As discussed in more
detail shortly, the core elements, established by Florida’s Uniform
Commercial Code (the Florida UCC), are (1) to whom is the note payable
and (2) who has possession of the note on the date suit is filed.2 In the
context of bearer notes, some confusion in analysis has occurred” because
it is sometimes forgotten that a thief can enforce a bearer note. For
example, with regards to bearer notes, courts have concluded there was
no standing because there was no proof of ownership of the note,3 when
ownership status is not an element of standing; with bearer notes,
possession of the note is the significant core element to be analyzed.
Another example leading to some confusion is the frequent invocation of
McLean v. JP Morgan Chase Bank National Ass’n, 79 So. 3d 170 (Fla. 4th
DCA 2012), when discussing principles of standing in foreclosure cases
involving bearer notes:

“A plaintiff who is not the original lender may establish
standing to foreclose a mortgage loan by submitting a note
with a blank or special endorsement, an assignment of the
note, or an affidavit otherwise proving the plaintiff’s status as
the holder of the note.” [Focht v. Wells Fargo Bank, N.A., 124
So. 3d 308, 310 (Fla. 2d DCA 2013)] (citing McLean v. JP

1 The discussion of the dual core elements of standing is limited to cases in which
the note has not been lost or improperly canceled or surrendered.
2 There is a recent opinion from the Second District indicating that standing is

determined as of the date an amended complaint is filed, rather than the initial
filing date of the suit. AS Lily LLC v. Morgan, 164 So. 3d 124, 125 (Fla. 2d DCA
2015) (“But by the time the verified first amended complaint to foreclose the
mortgage was filed, AS Lily was the holder of the note and mortgage.”). The First
District recently issued an opinion suggesting that a plaintiff having standing
when suit is filed may lose standing by the time of trial. Pennington v. Ocwen
Loan Servicing, LLC, 151 So. 3d 52, 54 (Fla. 1st DCA 2014) (“[E]ven if Ocwen had
standing at the commencement of the suit, it would have lost such standing when
it was no longer legally entitled to own or enforce the note.”).
3 Joseph v. BAC Home Loans Servicing, LP, 155 So. 3d 444, 445 (Fla. 4th DCA

2015) (“We agree that the plaintiff produced no evidence to show that it owned
the note or mortgage on the date of the filing of the complaint.”); Am. Home Mortg.
Servicing, Inc. v. Bednarek, 132 So. 3d 1222, 12 (Fla. 2d DCA 2014) (“A
foreclosure plaintiff has standing if it owns and holds the note at the time suit is
filed.”) (citation omitted); Olivera v. Bank of Am., N.A., 141 So. 3d 770, 773 (Fla.
2d DCA 2014) (“Nothing in the record reflects a chain of transfer of interest in the
note from the original lender, Ocwen, to BAC, the original plaintiff, or that BAC
became the holder of the note before it filed the subject complaint.”).

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 Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th
DCA 2012)).

Tremblay v. U.S. Bank, N.A., 164 So. 3d 85, 86 (Fla. 4th DCA 2015); see
also Ham v. Nationstar Mortg., LLC, 164 So. 3d 714, 717-18 (Fla. 1st DCA
2015). The discussion of McLean in the case law suggests that the types
of proof presented define the theories or elements of standing, when such
is not the case.

Statutory Framework as to Who Is Entitled to Enforce the Note

Florida case law makes clear that the right to enforce a mortgage (by
forced sale of property) is dependent on the right to enforce the note
secured by the mortgage. See WM Specialty Mortg., LLC v. Salomon, 874
So. 2d 680, 682 (Fla. 4th DCA 2004) (“[A] mortgage is but an incident to
the debt, the payment of which it secures.” (quoting Johns v. Gillian, 184
So. 140, 143-44 (Fla. 1938)). The person or entity entitled to enforce the
note is the person or entity to whom payment on the note is due. §
673.6021(1), Fla. Stat. (2010) (“[A]n instrument is paid to the extent
payment is made by or on behalf of a party obliged to pay the instrument
and to a person entitled to enforce the instrument.”). Under the Florida
UCC, the person or entity entitled to enforce the note (that is, receive
payment on the note) must be either: (1) the holder of the note; (2) a
nonholder in possession of the note who has the rights of a holder; or (3)
a person or entity who is not in possession of the note because the note
has been lost or was mistakenly surrendered or canceled as paid, but who
has the status of a holder. § 673.3011, Fla. Stat. (2010). As can be seen
from the statutory requirements, the person or entity entitled to enforce
the note must have the rights of a holder. The Florida UCC specifically
provides that a person may be entitled to enforce a note “even though the
person is not the owner of the instrument or is wrongful possession of the
instrument.” § 673.3011, Fla. Stat. (2010) (emphasis added).

The Florida UCC defines a “holder” to be “[t]he person in possession of
a negotiable instrument that is payable either to bearer or to an identified
person that is the person in possession.” § 671.201(21)(a), Fla. Stat. (2010)
(emphasis added). Thus, the statutory provisions regarding the definitions
of holder and who is entitled to enforce a note make it clear that standing
depends on (1) to whom the note is payable and (2) who has possession of
the note, assuming the note was not lost or improperly surrendered or
canceled. The case law says the critical time for determining the status of
the two core elements is the date the suit is filed. McLean, 79 So. 3d at
173.

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 Because possession of the note is one of the core elements for having
the right to enforce a note, the Florida UCC also has provisions discussing
concepts of “negotiation” and “transfer” of a note. These statutory
provisions have not been discussed extensively in the case law regarding
standing. Nonetheless, these provisions have significant importance for
an analysis of standing, because they impact how the two core elements
of standing play out.

Section 673.2011, Florida Statutes, addresses “negotiation” and
provides:

(1) The term “negotiation” means a transfer of possession,
whether voluntary or involuntary, of an instrument by a
person other than the issuer to a person who thereby becomes
its holder.

(2) Except for negotiation by a remitter, if an instrument is
payable to an identified person, negotiation requires transfer
of possession of the instrument and its indorsement by the
holder. If an instrument is payable to bearer, it may be
negotiated by transfer of possession alone.

§ 673.2011, Fla. Stat. (2010) (emphasis added).

Section 673.2031, Florida Statutes, deals with “transfer” of a note and
provides, in part:

(1) An instrument is transferred when it is delivered by a
person other than its issuer for the purpose of giving to the
person receiving delivery the right to enforce the instrument.

(2) Transfer of an instrument, whether or not the transfer is a
negotiation, vests in the transferee any right of the transferor
to enforce the instrument, including any right as a holder in
due course, but the transferee cannot acquire rights of a
holder in due course by a transfer, directly or indirectly, from
a holder in due course if the transferee engaged in fraud or
illegality affecting the instrument.[4]

4 The national Uniform Commercial Code Comment to this statute explains that
the exception announced in subsection (2) was adopted because “[a] person who
is party to fraud or illegality affecting the instrument is not permitted to wash the
instrument clean by passing it into the hands of a holder in due course and then
repurchasing it.” § 673.2031, Fla. Stat. Ann., UCC cmt. 2 (West 2010).

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 (3) Unless otherwise agreed, if an instrument is transferred for
value and the transferee does not become a holder because of
lack of indorsement by the transferor, the transferee has a
specifically enforceable right to the unqualified indorsement of
the transferor, but negotiation of the instrument does not
occur until the indorsement is made.

§ 673.2031, Fla. Stat. (2010) (emphasis added).

Because possession of the note is critical for the right to enforce a note,
the Florida UCC also has provisions which are directives affecting
entitlement of payment on the note by virtue of signatures on the note.
Section 673.3081(2), Florida Statutes (2010), provides

(2) If the validity of signatures is admitted or proved[,] . . . a
plaintiff producing the instrument is entitled to payment if the
plaintiff proves entitlement to enforce the instrument under s.
673.3011, unless the defendant proves a defense or claim in
recoupment.

§ 673.3081(2), Fla. Stat. (2010) (emphasis added).

As can be seen from the statutory framework, ownership (or history of
transfer) of the note is not the issue, with regards to standing, unless the
note is not in bearer form or is payable to someone or some entity other
than the plaintiff filing suit. In such case, documentation or evidence
regarding ownership, assignment, or transfer of the note must prove the
plaintiff has the rights of a holder. §§ 671.201(21); 671.2011(1);
673.2031(1), (2), and (3); 673.3011(2); and 673.3081(2), Fla. Stat. Stated
another way, ownership, assignment, or transfer of the note is important
to the analysis of standing only when the plaintiff is a nonholder in
possession of the note with the rights of a holder.

The majority opinion explains why the bank’s argument that it was
entitled to enforce the note cannot be upheld on appeal. I now express my
additional observations regarding the evidence submitted to the trial court
on the issue of standing—specifically, regarding whether the bank proved
its status as holder.

Status as Holder

The original note filed with the trial court contains an undated blank
indorsement. The bank’s sole witness at trial testified that the bank had
continuous possession of the original note when it began servicing the loan
in August 2007 until the note was filed with the court. That evidence, the

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bank argues, was competent substantial evidence to support the trial
court’s finding that the bank had standing to file the suit as the holder of
the note.

The bank’s argument fails. The bank does not dispute that its witness
could offer no proof as to when the blank indorsement was placed on the
note. No testimony was offered that the blank indorsement was on the
note on the date suit was filed. To the extent the bank is traveling on the
status of a holder of a blank indorsed note, the core element of possession
was proven, but the core element concerning to whom the note was
payable on the date suit was filed was not proven. Evidence of possession
of the note since 2007 does not establish that the note was endorsed in
blank prior to suit being filed.

Thus, I agree with reversing the final judgment in this case.

* * *

Not final until disposition of timely filed motion for rehearing.

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