BANK OF AMERICA, N.A. v. KENNETH H. GRAYBUSH and ROBIN B. GRAYBUSH

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

BANK OF AMERICA, N.A.,
Appellant,

v.

KENNETH H. GRAYBUSH a/k/a KENNETH HOWARD GRAYBUSH and
ROBIN B. GRAYBUSH a/k/a ROBIN BEAN GRAYBUSH,
Appellees.

No. 4D17-1256

[August 15, 2018]

Appeal from the Circuit Court for the Nineteenth Judicial Circuit, St.
Lucie County; William L. Roby, Judge; L.T. Case No. 562014CA002059
(H2).

Mary J. Walter of Liebler Gonzalez & Portuondo, Miami, for appellant.

Kendrick Almaguer and Thomas Eross Jr. of The Ticktin Law Group,
P.L.L.C., Deerfield Beach, for appellees.

FORST, J.

Appellant Bank of America, N.A. (“the Bank”) appeals a final judgment
in favor of appellees Kenneth and Robin Graybush (“the Borrowers”). The
trial court found that although the Bank had proven the elements of
foreclosure, the action was time-barred by the applicable statute of
limitations; accordingly, the trial court granted the Borrowers’ motion for
involuntary dismissal. For the reasons explained below, we reverse and
remand for the trial court to enter final judgment in favor of the Bank.

Background

On July 16, 2007, the Borrowers executed a promissory note in the
amount of $148,500, secured by a mortgage on real property. Under the
terms of the note, the Borrowers would make monthly installment
payments to satisfy the loan. The designated maturity date of the note,
for which all payments were due, was August 1, 2027. The Borrowers
agreed in the note, that “[i]f on AUGUST 01, 2027, I still owe amounts
under this Note, I will pay those amounts in full on that date, which is
called the ‘Maturity Date.’”

Paragraph twenty-two of the mortgage had an optional acceleration
clause providing that should the Borrowers default on any monthly
payment, the Bank could elect to provide them with a notice of
acceleration. Further, “[i]f the default is not cured on or before the date
specified in the notice, Lender at its option may require immediate payment
in full of all sums secured by this Security Instrument without further
demand and may foreclose this Security Instrument by judicial
proceeding.” (Emphasis added).

Paragraph nineteen of the mortgage provided that, after acceleration,
the Borrowers could reinstate the mortgage by curing (i.e., paying
everything owed under the terms of the note and mortgage) up until entry
of a judgment enforcing the mortgage. Upon reinstatement of the
mortgage, the mortgage “and obligations secured hereby [would] remain
effective as if no acceleration had occurred.” The Borrowers also agreed
that “[e]ven if, at a time when I am in default, the Note Holder does not
require me to pay immediately in full as described above, the Note Holder
will still have the right to do so if I am in default at a later time.”

Beginning on October 1, 2008, the Borrowers stopped making
installment payments on their mortgage. The Bank responded the
following month with a “Notice of Intent to Accelerate,” advising them of
the default and stating in part:

If the default is not cured on or before December 17, 2008, the
mortgage payments will be accelerated with the full amount
remaining accelerated and becoming due and payable in full,
and foreclosure proceedings will be initiated at that time.

The Borrowers subsequently did not cure the default, and on September
29, 2009, the Bank filed a complaint to foreclose and for the first time
“declare[d] the full amount payable under the Note and Mortgage to be
due,” pursuant to the mortgage’s optional acceleration clause. The
complaint alleged that the Borrowers defaulted on the note and mortgage
by failing to pay the “October 1, 2008 payment and all payments due
thereafter.” For reasons not relevant to this appeal, the Bank voluntarily
dismissed the complaint without prejudice on July 23, 2013.

On September 16, 2014, the Bank filed a second complaint for
foreclosure. The complaint alleged the same October 1, 2008 default and
that “all subsequent payments have not been made.”

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 At trial, the Bank’s witness, an employee who worked for almost nine
years as a “consumer resolution team representative,” testified that the
Borrowers defaulted on October 1, 2008 and that the loan was still in
default up to that point. The Bank introduced a payment history
evidencing the missed payments. The Borrowers declined to present any
evidence, and instead only raised a statute of limitations defense. At the
conclusion of the Bank’s case-in-chief, the Borrowers moved for
involuntary dismissal on that basis.

The trial court found that the Bank proved its case by a preponderance
of the evidence. However, it held that “the statute of limitations
commenced to run when [the Bank] exercised the acceleration option of
the Mortgage and notified [the Borrowers] of this exercise by its Notice of
Intent to Accelerate mailed on November 17, 2008, unequivocally and
clearly accelerating the debt should payments not be received on or before
December 17, 2008.” The court concluded that, based on the December
17, 2008 date, the complaint filed on September 16, 2014 was barred by
the five-year statute of limitations set forth in section 95.11(2)(c), Florida
Statutes (2017). As a result, the court dismissed the Bank’s case without
prejudice, and entered final judgment in favor of the Borrowers.

Analysis

“Generally, ‘the issue of whether [a] claim is barred by the statute of
limitations is a question of law subject to de novo review.’” Access Ins.
Planners, Inc. v. Gee, 175 So. 3d 921, 924 (Fla. 4th DCA 2015) (alteration
in original) (quoting Beltran v. Vincent P. Miraglia, M.D., P.A., 125 So. 3d
855, 859 (Fla. 4th DCA 2013)).

The questions presented on appeal are whether the Bank’s second
foreclosure complaint was barred by the relevant statute of limitations,
and if not, whether the Bank was entitled to all sums due under the note
and mortgage. In Florida, the statute of limitations to file a foreclosure
action is five years from the date of default. § 95.11(2)(c), Fla. Stat. (2017).

As a preliminary matter, we note that because we are dealing with an
optional acceleration clause in the mortgage, acceleration “is not
automatic or self-executing, but requires the lender to exercise this option
and to give notice to the borrowers that it has done so.” Snow v. Wells
Fargo Bank, N.A., 156 So. 3d 538, 542 (Fla. 3d DCA 2015); see also Reano
v. U.S. Bank Nat’l Ass’n, 191 So. 3d 959, 961 (Fla. 4th DCA 2016).

On appeal, both parties correctly acknowledge that the trial court erred
in picking December 17, 2008 as the date of acceleration. The Notice of

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Intent to Accelerate did not constitute an acceleration despite its language
that the note “will be accelerated” if the Borrowers failed to cure by that
date. The Bank retained discretion to accelerate at a later date, as the full
amount of principal due was not stated—only the amount due for October
and any additional regular payments and charges that came due before
December 17, 2008. See Snow, 156 So. 3d at 542 (holding that the portion
of a notice letter that stated “[i]f you do not pay the full amount of the
default, we shall accelerate the entire sum of both principal and interest
due and payable . . . ,” did not “convert[] the optional acceleration into a
prospective, self-executing acceleration which was automatically triggered
upon the failure of the [borrowers] to cure the default.”).

Just as in Snow, the letter here did not indicate that the Bank was
exercising its option to accelerate, but only that the Bank intended to
accelerate at some point on or after December 17, 2008 should the
Borrowers fail to cure. Id. at 542; see also Pino v. Deutsche Bank Nat’l Tr.
Co., 201 So. 3d 128, 128 (Fla. 3d DCA 2015). The Bank did not actually
accelerate the note until it filed the first complaint and declared all sums
immediately due. Typically, when a mortgage contains an optional
acceleration clause, “[t]he filing of suit for foreclosure amounts to exercise
of the option of the mortgagee to declare the whole of the principal sum
and interest secured by the mortgage due and payable.” Campbell v.
Werner, 232 So. 2d 252, 254 n.1 (Fla. 3d DCA 1970); see also Reano, 191
So. 3d at 961 (similarly explaining that when a mortgage contains an
optional acceleration clause, “[t]he filing of a lawsuit constitutes notice of
acceleration.”).

Admittedly, the Bank voluntarily dismissed the first complaint, but that
had no effect on the Bank’s ability to file a second complaint and re-
accelerate the mortgage, given that the dismissal was without prejudice,
and the Borrowers continued to be in default. “[A]fter the dismissal, the
parties are simply back in the same contractual relationship as before,
where the residential mortgage remained an installment loan, and the
acceleration of the mortgage declared in the unsuccessful foreclosure
action is revoked.” Bartram v. U.S. Bank Nat’l Ass’n, 211 So. 3d 1009,
1019 (Fla. 2016). “[A] dismissal without prejudice would allow a mortgagee
to bring another foreclosure action premised on the same default.” Id. at
1020.

“A voluntary dismissal [without prejudice] is not an adjudication on the
merits and therefore will not support a claim of res judicata.” Evergrene
Partners, Inc. v. Citibank, N.A., 143 So. 3d 954, 956 (Fla. 4th DCA 2014).
Accordingly, “after the dismissal, the parties are simply placed back in the
same contractual relationship as before, where the residential mortgage

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remained an installment loan, and the acceleration of the mortgage
declared in the unsuccessful foreclosure action is revoked.” Bartram, 211
So. 3d at 1019.

Even though the Borrowers concede error as to the trial court’s finding
that the date of acceleration was December 17, 2008, they argue that the
trial court’s final judgment should be affirmed on alternative grounds,
based on the Bank’s allegation in its second foreclosure action that the
Borrowers defaulted on October 1, 2008. The Borrowers point out that
this date is more than five years from the date of filing the second
complaint—September 16, 2014—and so the complaint should still be
dismissed as barred by the statute of limitations. To support their
argument, the Borrowers cite to Collazo v. HSBC Bank USA, N.A., 213 So.
3d 1012 (Fla. 3d DCA 2016), which held a second complaint was barred
by the statute of limitations because it alleged a default date more than
five years prior to the commencement of the second action. Id. at 1013.

We disagree with the Borrowers that the complaint was barred by the
statute of limitations. While the Bank needed to allege a default date for
which the statute of limitations had not yet run, Bartrum, 211 So. 3d at
1020, the Borrowers overlook the crucial fact that the complaint also
alleged continuing defaults ever since the October 1, 2008 default. Alleging
and proving separate and continuing defaults, some of which fall within
five years of the filing of the complaint, satisfies the statute of limitations.
Depicciotto v. Nationstar Mort. LLC, 225 So. 3d 390, 391 (Fla. 4th DCA
2017); see also Kebreau v. Bayview Loan Servicing, LLC, 225 So. 3d 255,
256 (Fla. 4th DCA 2017) (holding that “the complaint was not barred by
the statute of limitations where it alleged continuing defaults”);
Desylvester v. Bank of N.Y. Mellon ex rel. Holders of Alt. Loan Tr. 2005-62,
Mortg. Pass-Through Certificates Series 2005-62, 219 So. 3d 1016, 1020
(Fla. 2d DCA 2017) (concluding that “the allegations of the complaint in
the underlying action that the borrowers were in a continuing state of
default at the time of the filing of the complaint was sufficient to satisfy
the five-year statute of limitations”).

The Borrowers’ reliance on Collazo is misplaced because, unlike in
Depicciotto, Kebreau, or Desylvester, the bank in that case did not allege
continuing defaults that took place within five years of filing the complaint.
Collazo, 213 So. 3d at 1013 (“In contrast to these . . . cases, the foreclosure
action in the case before us was commenced on January 24, 2014, based
on a default in payment alleged to have occurred on April 1, 2008. Counsel
for [the bank] insisted on trying the case on the basis of that default.”); see
also HSBC Bank USA, Nat’l Ass’n for Registered Holders of Nomura Home
Equity Home Loan, Inc. v. Estate of Petercen, 227 So. 3d 640, 642 (Fla. 4th

5
DCA 2017) (noting that Collazo resulted in a dismissal “because a single
date of default was alleged in the . . . complaint [at issue]”).

Having found that the Bank’s complaint was timely, we further hold
that, in light of the competent, substantial evidence supporting the trial
court’s finding that the Bank proved its case, the Bank was entitled to all
sums alleged and proven due under the note and mortgage—even those
sums due more than five years from the date of filing the complaint. In
doing so, we agree with the holding and rationale of Gonzalez v. Federal
National Mortgage Association, No. 3D17-1246, 2018 WL 3636467 at *3
(Fla. 3d DCA Aug. 1, 2018), which dealt with virtually identical facts on
this issue. We also certify conflict with Velden v. Nationstar Mortgage, LLC,
234 So. 3d 850 (Fla. 5th DCA 2018), which would expressly exclude the
Bank from recovering any such monies. Id. at 851-52.

We note that the Velden majority principally relied on five cases in
limiting entitlement to installment payments to within five years of filing
of a complaint. Id. However, in two of the cases, the lender had not
accelerated the note; rather, it was suing for judgment on individual
installments. Greene v. Bursey, 733 So. 2d 1111, 1114-15 (Fla. 4th DCA
1999); Cent. Home Tr. Co. v. Lippincott, 392 So. 2d 931, 932-33 (Fla. 5th
DCA 1980). In two other cases, the plaintiff bank conceded that it could
not recover for sums due more than five years prior to the commencement
of the action, so the cases did not decide the issue. U.S. Bank, N.A. v.
Diamond, 228 So. 3d 177, 179 (Fla. 5th DCA 2017); U.S. Bank Nat’l Ass’n
v. Bartram, 140 So. 3d 1007, 1009 (Fla. 5th DCA 2014). The last case was
a quiet title action. Kaan v. Wells Fargo Bank, N.A., 981 F. Supp. 2d 1271,
1272-74 (S.D. Fla. 2013). The court there held the lender could not sue
on defaults more than five years past due, but it did not speak to
entitlement to payments more than five years past due. Id.

Our holding is consistent with the view expressed by the concurring
opinion in Velden, which in turn gave deference to Justice Lawson’s recent
concurrence in Bollettieri Resort Villas Condominium Ass’n, Inc. v. Bank of
New York Mellon, 228 So. 3d 72 (Fla. 2017). 1 See Velden, 234 So. 3d at
852-53 (Lambert, J., concurring). Justice Lawson’s opinion noted that
“[u]nder the terms of most long-term notes and mortgages . . . the total
amount due under the note does not become due until maturity—most
commonly thirty years after signing.” Bollettieri, 228 So. 3d at 74 (Lawson,
J., concurring). Given that a long-term note is just that, a promise to pay

1Justice Lawson acknowledged that the views expressed in his concurrence were
of no precedential value, but he invited the district courts of appeal to reconsider
this issue on their own. Bollettieri, 228 So. 3d at 75 (Lawson, J., concurring).

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a determinate sum by a determinate date, Justice Lawson concluded that
the failure to pay the entire amount due by the final due date—i.e.,
maturity date—is the last element of a foreclosure cause of action accruing
the applicable statute of limitations. Id.

We readily agree. When a mortgage contains an optional acceleration
clause, “forbearance [to collect all sums due upon a monthly default] will
not constitute a waiver or defense against future collection of all sums due
and owing under the note.” Id. This is especially true when borrowers
contractually approve such a provision in a note or mortgage. And here,
the Borrowers expressly did so by agreeing in the note that “[i]f on AUGUST
01, 2027, I still owe amounts under this Note, I will pay those amounts in
full on that date, which is called the ‘Maturity Date.’” They also agreed, in
no ambiguous terms, that “[e]ven if, at a time when I am in default, the
Note Holder does not require me to pay immediately in full as described
above, the Note Holder will still have the right to do so if I am in default at
a later time.” 2

Accordingly, we hold that based on the contractual provisions of the
note, neglecting to sue for missed payments beyond five years did not
waive the Bank’s entitlement to all sums due on a later date, when that
later date did not lie five years beyond a monthly default, or five years
beyond the maturity date of the note. See Conner v. Coggins, 349 So. 2d
780, 781-82 (Fla. 1st DCA 1977) (noting that when a mortgage contains
an optional acceleration clause, the lender could have either brought its
foreclosure suit within five years of a monthly default, or within five years
from the date of the maturity of the note).

In the scenario in which a bank chooses to accelerate all sums due
based on a monthly default, we note that the supreme court in Bartram
held that “with each subsequent default, the statute of limitations runs
from the date of each new default providing the mortgagee the right, but
not the obligation, to accelerate all sums then due under the note and
mortgage.” Bartram, 211 So. 3d at 1019 (emphasis added). With each
new default, the bank “had the right to file a subsequent foreclosure
action—and to seek acceleration of all sums due under the note—so long as
the foreclosure action was based on a subsequent default, and the statute
of limitations had not run on that particular default.” Id. at 1021
(emphasis added); accord Gonzalez, 2018 WL 3636467 at *2 (similarly

2Just like here, “[t]he Bollettieri contract also clearly provides that the lender or
holder may forbear and hold off on accelerating the note—and that forbearance
will not constitute a waiver or defense against future collection of all sums due
and owing under the note.” Bollettieri, 228 So. 3d at 74 (Lawson, J., concurring).

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emphasizing the bank’s right to accelerate “all sums due under the note”
provided the action was timely filed); Desai v. Bank of N.Y. Mellon Tr. Co.,
240 So. 3d 729, 730 (Fla. 4th DCA 2018) (same).

Alternatively, if a lender chooses not to accelerate all sums due based
on a monthly default, we have previously held the lender can wait until
the maturity date to recover all sums due. Greene, 733 So. 2d at 1115 (“It
is undisputed that [the lender] never accelerated the note even though,
under the terms of the guaranty, he had the option of doing so upon
[borrower’s] default in any given month. Thus, the statute of limitations
on the underlying note would not have commenced until it matured on
April 1, 1991.”).

Very recently, a federal bankruptcy court addressed the issue
presented in this case and in Velden. See In re BCML Holding LLC, No. 18-
11600-EPK, 2018 WL 2386814 (Bankr. S.D. Fla. May 24, 2018). In
expressing “[a]maz[ement]” with respect to the Velden opinion, which it
deemed “not well founded in the law,” id. at *2, the court opined, in
relevant part,

When one is considering an accelerated obligation, the
triggering default and its relationship to the statute of
limitations is completely separate from the debt that is subject
to judgment and collection. The Florida Supreme Court
in Bartram itself explains that the debt which is the subject of
foreclosure is the accelerated debt, meaning the entire
amount due under the mortgage loan. The Florida Supreme
court stated: “[W]ith each subsequent default, the statute of
limitations runs from the date of each new default providing
the mortgagee the right, but not the obligation, to accelerate
all sums then due under the note and mortgage.” Bartram,
211 So. 3d at 1019. The Florida Supreme Court made it clear
that in a subsequent foreclosure the lender could pursue the
entire accelerated debt. In other words, the statute of
limitations is a procedural bar only. Once a timely action is
filed, the remedy is controlled by contract.

....

In any case, the typical lender files suit seeking acceleration
of its debt such that the entire sum owing, including principal,
interest, advances, costs, and fees, will be included in the
judgment. That entire debt . . . is sought to be liquidated in
the foreclosure action. When a lender seeks judgment on an

8
 accelerated debt, it makes no sense to suggest that any
component of that accelerated obligation should be excluded
from the judgment because it “came due” more than five years
prior. It did not come due more than five years prior. It came
due upon acceleration. It is all due presently, both what was
to be paid on prior installment dates and what would
otherwise be due on future installment dates. The installment
dates no longer matter for purposes of the accelerated debt; it
is all one debt.

In re BCML Holding LLC, 2018 WL 2386814 at *2 (emphasis added). See
also Gonzalez, 2018 WL 3636467 at *3 (“[W]hen considering an accelerated
obligation, while the triggering default must occur within the five year
limitations period, the debt that is subject to judgment and collection is
the accelerated debt, i.e., the entire amount due under the mortgage loan
[and not individual installments]”).

The second complaint in the instant case was timely filed, and not
procedurally barred, because it alleged continuing defaults occurring
within five years of the complaint. The Bank subsequently seeking all
sums due was remedially valid, and not substantively limited, given the
contractual provisions in the note expressly allowing the Bank to recover
all sums due at a later date, even if the Bank forbore foreclosing based on
defaults more than five years prior. 3

When a note contains an optional acceleration clause, a lender only
runs out of opportunities to foreclose, under the applicable statute of
limitations, after five years of the latest default, or after five years of the
date of maturity of the note. But, should a lender bring a timely action
under either scenario, it is entitled to all sums due under the note and
mortgage—should the note and mortgage contractually provide. Here, it
does—“Even if, at a time when I am in default, the Note Holder does not
require me to pay immediately in full as described above, the Note Holder
will still have the right to do so if I am in default at a later time.”

Conclusion

The trial court erred in finding that the notice letter’s deadline to cure

3 See Velden, 234 So. 3d at 853 (Lambert, J., concurring) (“Under Justice
Lawson’s analysis [in Bollettieri,] [the bank] should not be deemed to have waived
or forfeited its right to have included in the final judgment of foreclosure those
monies owed for non-payments on the note that are more than five years from
the filing of the lawsuit based on the statute of limitations defense.”).

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was the acceleration date. Rather, the mortgage was accelerated when the
Bank filed its first, and then second, complaint. Though the second
complaint alleged the same October 1, 2008 default date, which was more
than five years prior to filing, it also alleged that “all subsequent payments
have not been made,” which included defaults satisfying the applicable
five-year statute of limitations.

The Bank did not waive entitlement to missed payments due more than
five years prior to the filing of the second complaint. The statute of
limitations is only a procedural bar to filing a foreclosure complaint. Upon
a timely filing, the contractual provisions of the note and mortgage take
effect to control the remedy. And here, the Borrowers and Bank expressly
agreed in the note that the Borrowers would either pay all sums upon
acceleration, or all sums due upon maturity of the note. Given that the
Borrowers ceased payments, and the Bank timely chose to accelerate all
sums based on the Borrowers’ defaults, we reverse and remand for the
trial court to enter final judgment in favor of the Bank, and award all sums
due under the note dating back to October 1, 2008.

Reversed and remanded with instructions; conflict certified.

DAMOORGIAN and KLINGENSMITH, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing

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