DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
THOMAS CARACCIA,
Appellant,
v.
U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR BANK OF
AMERICA FUNDING CORPORATION MORTGAGE PASS THROUGH
CERTIFICATES, SERIES 2006-2,
Appellee.
No. 4D15-825
[February 24, 2016]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Roger B. Colton, Judge; L.T. Case No.
502011CA014772XXXXMB.
John M. Jorgensen and Derek M. Jorgensen of Scott, Harris, Bryan,
Barra & Jorgensen, P.A., Palm Beach Gardens, for appellant.
Nancy M. Wallace of Akerman LLP, Tallahassee, William P. Heller of
Akerman LLP, Fort Lauderdale, and Celia C. Falzone of Akerman LLP,
Jacksonville, for appellee.
FORST, J.
Appellant Thomas Caraccia appeals the final judgment of foreclosure
entered in favor of Appellee U.S. Bank. Appellant argues U.S. Bank failed
to prove that it had standing to foreclose and failed to comply with the
conditions precedent to foreclose. We disagree and affirm the trial court’s
entry of judgment in favor of U.S. Bank.
Background
In 2005, Appellant executed a promissory note and mortgage in favor
of Virtual Bank in order to purchase a property in Palm Beach Gardens.
Testimony at trial established that Virtual Bank endorsed the note in
blank, making it bearer paper, before transferring possession of the note
to Bank of America. Bank of America transferred the note to U.S. Bank,
as Trustee for a pooling and servicing agreement, in 2007. Shortly before
the filing of the complaint, U.S. Bank gave physical possession of the note
back to Bank of America, this time to act as a servicer for U.S. Bank.
Appellant defaulted on his mortgage and a default letter was sent to a
PO Box in Palm Beach Gardens. U.S. Bank then filed a foreclosure action
against Appellant. Appellant raised several defenses, including lack of
standing and failure to comply with paragraph twenty-two of the mortgage,
which specifies procedures for notice in the event of a default. After a
bench trial, the trial court entered judgment in favor of U.S. Bank. This
appeal followed.
Analysis
A. Standing
“We review the sufficiency of the evidence to prove standing to bring a
foreclosure action de novo.” Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950,
951 (Fla. 4th DCA 2014) (quoting Lacombe v. Deutsche Bank Nat’l Trust
Co., 149 So. 3d 152, 153 (Fla. 1st DCA 2014)).
Appellant first argues that U.S. Bank failed to show that it had standing
to foreclose. Appellant contends that, because the note was endorsed in
blank, U.S. Bank’s failure to have physical possession of the note deprived
it of standing.
“A crucial element in any mortgage foreclosure proceeding is that the
party seeking foreclosure must demonstrate that it has standing to
foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170,
173 (Fla. 4th DCA 2012). “[A] party’s standing is determined at the time
the lawsuit was filed.” Id.
A negotiable instrument, such as the promissory note in this case, is
enforceable by the holder, a nonholder in possession of the instrument
with the rights of a holder, or a person not in possession but entitled to
enforce it. § 673.3011, Fla. Stat. (2013). A holder is “the 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.
“[W]ith bearer notes, possession of the note is the significant core
element to be analyzed.” Rodriguez v. Wells Fargo Bank, N.A., 178 So. 3d
62, 65 (Fla. 4th DCA 2015) (Conner, J., concurring). In this case, while
U.S. Bank did not have physical possession of the note at the time of filing
the complaint, it nonetheless maintained a possessory interest in the note.
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Although Bank of America physically possessed the note as the servicer of
the loan, the meaningful interest in the promissory note still remained with
U.S. Bank. Even where a third party has physical possession of the note,
so long as the plaintiff “had the power to exercise control over it, then [the
plaintiff] had constructive possession of the note.” Deakter v. Menendez,
830 So. 2d 124, 128 (Fla. 3d DCA 2002) (citing Bush v. Belenke, 381 So.
2d 315, 316 (Fla. 3d DCA 1980) (defining constructive possession as
possession in which a person “has such control over the property that he
may deliver the possession of it, if he so desires, as for example, where an
agent holds property for his principal”)).
This case is distinguishable from Tremblay v. U.S. Bank, National Ass’n,
164 So. 3d 85 (Fla. 4th DCA 2015). In Tremblay, the foreclosing bank’s
witness testified that the servicer was the holder of the note. Though the
witness testified there was a pooling and servicing agreement between the
servicer and the bank, he acknowledged he had not seen it, and it was not
admitted into evidence. Id. at 86. Based on this testimony, we held that
the servicer was the proper party to initiate the foreclosure proceedings.
Id.
Here, on the other hand, there was no evidence that Bank of America
held the note. The witness’s testimony and other evidence made it clear
that Bank of America merely operated as the servicer of the note for U.S.
Bank. This other evidence includes the Pooling and Servicing Agreement
for Appellant’s loan, which confirmed that any loan documents a servicer
may possess are held “for and on behalf of” U.S. Bank and remain U.S.
Bank’s exclusive property. The holder/servicer relationship between U.S.
Bank and Bank of America allowed U.S. Bank to exercise control over the
note, even while Bank of America retained physical possession of the
document. Had U.S. Bank requested, it could have obtained physical
possession of the note from its agent, Bank of America. While it might
have simplified the trial court’s standing analysis for U.S. Bank to have
done so in this case, we hold that such procurement of physical possession
was ultimately unnecessary where U.S. Bank is able to show constructive
possession of the note. We emphasize that we do not hold that possession
is not necessary when bearer paper is at issue; instead we hold only that,
when an agency relationship such as that exists here is at issue, the
element of possession can be met through either actual or constructive
possession.
B. Conditions Precedent
Appellant also argues U.S. Bank failed to comply with the conditions
precedent found in paragraphs fifteen and twenty-two of the mortgage and
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paragraph seven of the note. Paragraph fifteen of the mortgage states, in
relevant part, that “The notice address shall be the Property Address
unless Borrower has designated a substitute notice address by notice to
the Lender. Borrower shall promptly notify Lender of Borrower’s change
of address.” Similarly, paragraph seven of the note requires “any notice
that must be given to me under this Note will be given by . . . mailing it
. . . to me at the Property Address above or at a different address if I give
the Note Holder a notice of my different address.”
Here, the witness testified the United States Postal Service informed
U.S. Bank that Appellant did not reside at the property address and
provided the Bank with a new address at a PO Box. Consequently, U.S.
Bank sent the default notice to this new address, rather than the property
address. Six days later, Appellant sent a letter to the Bank, which listed
Homeowner’s return address as the PO Box to which the earlier
acceleration letter had been sent.
“Absent some prejudice, the breach of a condition precedent does not
constitute a defense to the enforcement of an otherwise valid contract.”
Gorel v. Bank of N.Y. Mellon, 165 So. 3d 44, 47 (Fla. 5th DCA 2015). In
this case, the address used by U.S. Bank for the default letter was a valid
address for Appellant. Although Appellant did not personally or directly
notify the Bank of this change of address prior to the mailing of the default
letter, U.S. Bank reasonably relied on the information from the Postal
Service to ensure that Appellant actually received the notice. Had the
Postal Service’s information proven incorrect, this may have been a
different case, but Appellant’s later correspondence from this address
confirmed the accuracy of the address utilized. The failure of U.S. Bank
to send the notice to the property address did not prejudice Appellant, and
may have even benefitted him. Accordingly, we decline to reverse the trial
court’s ruling on this issue.
Conclusion
In conclusion, Appellant has failed to show that the trial court erred in
entering judgment in favor of U.S. Bank. Appellee U.S. Bank was able to
prove that it had standing to foreclose as a holder in constructive
possession of the note. Additionally, although U.S. Bank sent the default
notice to an address other than the one specified in the mortgage contract,
this error did not prejudice Appellant and is insufficient to require reversal.
The trial court’s entry of judgment is affirmed.
Affirmed.
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WARNER and TAYLOR, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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