Case: 14-14662 Date Filed: 05/12/2017 Page: 1 of 10
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-14662
Non-Argument Calendar
________________________
D.C. Docket No. 1:13-cv-24036-MGC
LIBARDO GOMEZ,
Plaintiff - Appellant,
versus
HOUSEHOLD FINANCE CORPORATION, III,
a Delaware corporation,
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
a Delaware corporation,
HSBC MORTGAGE SERVICES, INC.,
a Delaware corporation,
VOLT ASSET HOLDINGS TRUST XVI,
Defendants - Appellees.
Case: 14-14662 Date Filed: 05/12/2017 Page: 2 of 10
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(May 12, 2017)
Before MARTIN, JULIE CARNES, and ANDERSON, Circuit Judges.
PER CURIAM:
Plaintiff Libardo Gomez appeals the dismissal of his putative class-action
complaint, in which he sought a declaration that the promissory note and mortgage
encumbering his home were unenforceable due to the running of the statute of
limitations on foreclosure proceedings. After review of the record and the
pertinent law, we AFFIRM.
BACKGROUND
In July 2005, Gomez and his wife obtained a loan from Wilmington Finance
totaling $190,000 in order to purchase a condominium in Miami, Florida.
Gomez’s monthly repayment obligations were memorialized in a promissory note
(the “Note”) that will mature on September 1, 2035, and were secured by a
mortgage on the home (the “Mortgage”). The Mortgage names Mortgage
Electronic Registration Systems, Inc. (“MERS”) as nominee for Wilmington
2
Case: 14-14662 Date Filed: 05/12/2017 Page: 3 of 10
Finance. The Note and Mortgage were subsequently assigned to a separate entity
called Household Finance Corporation III (“Household”).
The Mortgage contains an optional acceleration clause, under which the
lender holds a right to accelerate outstanding payments in the event of default as
long as it provides the mortgagor with notice of the default and at least thirty days
to cure. In turn, the mortgagor retains a right to reinstate the Note and Mortgage
after acceleration if it meets certain conditions specified in the Mortgage, including
cure of all past payment defaults.
Gomez defaulted on the loan on November 1, 2007, by failing to make
scheduled payments. On April 2, 2008, Household initiated a foreclosure
proceeding and expressly notified Gomez that, “[b]y reason of said default,”
Household was exercising “its option to declare the entire principal balance and
accrued interest due and payable” in addition to foreclosing the Mortgage. The
court presiding over the foreclosure proceeding entered judgment in favor of
Household shortly thereafter.
After judgment was entered, but before the foreclosure process began,
Household moved the court to vacate its judgment because, according to
Household, the matter had been “resolved by the obligation being reinstated.” The
3
Case: 14-14662 Date Filed: 05/12/2017 Page: 4 of 10
court granted the motion, dismissing the foreclosure suit without prejudice and
ordering the return of the Note and Mortgage to Household.
Roughly one year later, Household assigned the Note and Mortgage to
HSBC Mortgage Services, Inc. (“HSBC”), which ultimately assigned its interest to
an entity called Volt Asset Holdings Trust XVI (“Volt”). Gomez named MERS,
Household, HSBC, and Volt as defendants in the underlying putative class action.
Despite Gomez’s payment delinquencies since November 1, 2007, neither
Household nor any of its assignees has successfully foreclosed the mortgage.1 In
his complaint before the district court, Gomez alleged that Defendants’ failure to
re-initiate foreclosure proceedings within the five-year limitations period for such
actions has rendered the Note and Mortgage unenforceable. As such, Gomez
sought a declaratory judgment extinguishing the Note and Mortgage and quieting
title to the property. The claim is founded on Gomez’s contentions that, under
Florida law, the five-year limitations period should be measured from the date of
his initial default—or, at the latest, from the date on which the lender accelerated
1
Gomez asserts in his briefing on appeal that HSBC filed a foreclosure proceeding against
Gomez in June 2009 and that the suit was dismissed involuntarily two years later for failure to
prosecute. Gomez failed, however, to allege facts regarding this second proceeding in his
complaint, and evidence of the proceeding is not part of the record on appeal. As such, we do
not consider this proceeding in our analysis.
4
Case: 14-14662 Date Filed: 05/12/2017 Page: 5 of 10
payment—and that the expiration of that period precludes enforcement of any
subsequent missed payments under the Note. Put differently, Gomez argues that
his lender’s failure to foreclose on the property within five years of its initial
foreclosure filing renders all future payments due under the Note and Mortgage
unenforceable.
The district court rejected Gomez’s narrow interpretation of the statute of
limitations and dismissed his complaint for failure to state a claim. See Fed. R.
Civ. P. 12(b)(6). Gomez appeals that dismissal. We review de novo, accepting the
complaint’s allegations as true and construing them in the light most favorable to
Gomez. See CSX Transp., Inc. v. Gen. Mills, Inc., 846 F.3d 1333, 1336 (11th Cir.
2017).
DISCUSSION
Gomez’s complaint sought two forms of relief: a declaration that any causes
of action under the Note and Mortgage had expired under the statute of limitations
and thus were unenforceable against Gomez and the mortgaged property; and an
order quieting title to the property in Gomez. It is undisputed that Florida law
governs Gomez’s substantive claims. Florida’s statute of limitations states that an
action to foreclose a mortgage must be commenced within five years of the date on
which the cause of action accrues. Fla. Stat. § 95.11(2)(b)–(c), § 95.031(1).
5
Case: 14-14662 Date Filed: 05/12/2017 Page: 6 of 10
There is no dispute in this case that Household notified Gomez of its intent
to accelerate the Note at the time Household filed its foreclosure action. But
Gomez and Defendants disagree as to the effect of the foreclosure action’s
subsequent dismissal on the acceleration of the Note. Defendants argue, in line
with the district court’s conclusion below, that the voluntary dismissal of the
foreclosure action without prejudice had the effect of reinstating the obligations of
the Note and “decelerating” payments thereunder. In Defendants’ view, because
the Note was reinstated, each of Gomez’s subsequent defaults constituted separate
causes of action from which distinct five-year limitations periods must be
calculated. Thus, any defaults that occurred less than five years ago remain
enforceable under the Note and Mortgage.
Gomez contends that the dismissal did not have the effect of automatically
reinstating the Note and Mortgage, and that none of the defendant entities took
steps to decelerate payments due. Because payments under the Note were
accelerated as of the filing of the foreclosure proceeding on April 2, 2008, the
limitations period began to run at that time and covered the entire outstanding
balance on the Note. On this theory, the statute of limitations as to the entirety of
the loan expired on April 2, 2013, meaning that the Note is currently unenforceable
and the Mortgage may not be foreclosed.
6
Case: 14-14662 Date Filed: 05/12/2017 Page: 7 of 10
The parties’ positions raise two questions of Florida law. First: Does the
dismissal of a foreclosure action in which the lender exercised its option to
accelerate the debt have the effect of “decelerating” payment obligations under the
applicable note and mortgage, thus restoring the parties’ initial contractual
relationship? And second: Do a mortgagor’s missed installment payments on a
mortgage loan constitute separate and distinct causes of action for purposes of
analyzing the statute of limitations?
The Florida Supreme Court answered both these questions in the affirmative
in Bartram v. U.S. Bank National Association, 211 So. 3d 1009 (Fla. 2016).2 The
facts before the court in Bartram were identical in several material respects to the
facts before us. Mortgagor Bartram borrowed over $650,000 to purchase a home
and secured the loan with a mortgage on the property. Id. at 1013. Bartram’s
mortgage gave the lender a right to accelerate payments upon default; in turn, the
mortgagor was empowered to reinstate the note post-acceleration once certain
2
These two questions came before the Florida Supreme Court upon certification by the Fifth
District Court of Appeals. The Supreme Court’s review remained pending at the time Gomez
filed the instant appeal. Given the relevance of Bartram to the arguments on which Gomez
based his claims, this Court held Gomez’s appeal in abeyance pending the Supreme Court’s final
decision.
7
Case: 14-14662 Date Filed: 05/12/2017 Page: 8 of 10
conditions were met. 3 Id. at 1013–14. Bartram stopped making monthly payments
on his mortgage shortly after executing the loan. Id. at 1014. In response, the
lender initiated a foreclosure action against Bartram and exercised its option to
accelerate payments. Id. Nearly five years later, the foreclosure action was
involuntarily dismissed due to the lender’s failure to appear at a case-management
conference. Id. The lender made no subsequent efforts to reinitiate the foreclosure
action. Id. Five years after the lender’s first foreclosure filing, Bartram sought a
declaratory judgment canceling the mortgage and quieting title to his property,
arguing—as Gomez does here—that the expiration of the limitations period barred
subsequent enforcement. Id. at 1015.
The Florida Supreme Court rejected Bartram’s argument. First, it held that
“a subsequent and separate alleged default create[s] a new and independent right in
the mortgagee to accelerate payment on the note in a subsequent foreclosure
action,” thus causing a new limitations period to begin to run from the date of each
new default. Bartram, 211 So. 3d at 1019 (citing Singleton v. Greymar Assoc., 882
So. 2d 1004, 1008 (Fla. 2004)) (internal quotation marks omitted). Second, the
3
The mortgages Bartram and Gomez signed were standard residential form mortgages whose
language is substantively identical.
8
Case: 14-14662 Date Filed: 05/12/2017 Page: 9 of 10
Court concluded that, where a note contains a reinstatement provision, dismissal of
a foreclosure action with or without prejudice has the effect of decelerating future
payment obligations, thus restoring the “installment nature” of the note. See id. at
1020–21. Therefore, in a case like Bartram’s:
the statute of limitations on the balance under the note and mortgage would
not continue to run after an involuntary dismissal, and thus the mortgagee
would not be barred by the statute of limitations from filing a successive
foreclosure action premised on a ‘separate and distinct’ default. Rather,
after the dismissal, the parties are simply placed back in the same contractual
relationship as before, where the residential mortgage remained an
installment loan, and the acceleration of the residential mortgage declared in
the unsuccessful foreclosure action is revoked.
Id. at 1019. The Court made clear that, for purposes of this analysis, it is irrelevant
whether the foreclosure suit was dismissed with or without prejudice. Id. at 1020.
Thus, under the Court’s holdings, Bartram’s lender remained free to recover
unpaid installments less than five years old, even though the lender had failed to
timely pursue foreclosure on Bartram’s first round of defaults. See id. at 1021–22.
Our primary task is to apply Gomez’s facts to the law articulated in Bartram.
In so doing, we note that the only meaningful factual distinction between Bartram
and Gomez’s respective cases is that, in the former, the lender’s foreclosure action
was dismissed involuntarily, while the suit against Gomez was dismissed
voluntarily. The analysis and express holdings of Bartram give no indication that
9
Case: 14-14662 Date Filed: 05/12/2017 Page: 10 of 10
this distinction is significant, and it therefore does not alter our conclusion under
Gomez’s facts.4
Given the near-identical postures of this case and Bartram, we conclude that
Gomez’s complaint fails to state a claim for the declaratory relief sought because it
fails to allege that Gomez’s Note and Mortgage are not enforceable as to payment
defaults that occurred subsequent to Household’s initial foreclosure filing.
Because Gomez has failed to allege that the Note and Mortgage are unenforceable,
his pursuit of an order quieting title to the mortgaged property similarly fails. The
district court’s analysis below tracked the reasoning of Bartram and thus was
without error.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s dismissal of
Gomez’s complaint for failure to state a claim. 5
4
Indeed, in resolving a split among appellate courts on the legal issues presented in Bartram,
the Florida Supreme Court embraced an appellate-court opinion that applied these issues to a
voluntary-dismissal fact pattern. See Bartram, 211 So. 3d at 1018 (citing Evergrene Partners,
Inc. v. Citibank, N.A., 143 So. 3d 954, 955 (Fla. 4th DCA 2014)).
5
Because we affirm on the basis of Bartram, we do not reach the alternative grounds for
dismissal Defendants raise on appeal.
10