Hayes v. Reverse Mortgage Solutions

Third District Court of Appeal
State of Florida

Opinion filed November 21, 2018.
Not final until disposition of timely filed motion for rehearing.
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No. 3D17-1603
Lower Tribunal No. 14-24174
________________

Judith Hayes,
Appellant,

vs.

Reverse Mortgage Solutions, Inc.,
Appellee.

An Appeal from the Circuit Court for Miami-Dade County, Migna Sanchez-
Llorens, Judge.

Legal Services of Greater Miami, Inc., and Jacqueline C. Ledon and Jeffrey
M. Hearne, for appellant.

GrayRobinson, P.A., and Frank A. Shepherd, Terrance W. Anderson, Jr.,
and Bryan F. DuBon; Robertson, Anschutz & Schneid, P.L., and David Rosenberg
and Cynthia L. Comras (Boca Raton), for appellee.

Before SUAREZ, LOGUE, and LINDSEY, JJ.

LOGUE, J.
 Appellant Judith Hayes appeals a Final Judgment of Foreclosure. This case

presents an issue of first impression as to when the statute of limitations in section

95.11(2)(c), Florida Statutes, begins to run for purposes of a reverse mortgage

where the borrower died before the note matured. We hold the statute of

limitations does not begin until the note matures and, accordingly, we affirm.

I. BACKGROUND

On October 26, 2007, Ruby Hayes, a single, 78-year old woman, executed a

home equity conversion note and mortgage, commonly known as a reverse

mortgage. The note and mortgage were signed by her daughter, Appellant Judith

Hayes, acting as attorney-in-fact. Under the terms of the note and mortgage, the

Lender, Countrywide Bank, FSB, advanced moneys to the borrower and the

borrower was required to pay the principal and interest on November 25, 2079.

Crucial to the contract between the parties was Paragraph 9 of the reverse

mortgage which contained an optional acceleration clause identifying two distinct

conditions that would allow the borrower to accelerate the debt and foreclose,

including the death of the borrower or the transfer of title. Paragraph 9 reads:

(a) Due and Payable. Lender may require
immediate payment in full of all sums secured by
this Security Instrument if:

(i) A Borrower dies and the Property is not the
principal residence of at least one surviving
Borrower; or

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 (ii) All of a Borrower’s title in the Property (or his
or her beneficial interest in a trust owning all or
part of the Property) is sold or otherwise
transferred and no other Borrower retains (a) title
to the Property in fee simple, (b) a leasehold under
a lease for less than 99 years which is renewable or
a lease having a remaining period of not less than
50 years beyond the date of the 100th birthday of
the youngest Borrower, or (c) a life estate in the
Property (or a beneficial interest in a trust with
such an interest in
the Property).

(Emphasis added).

On May 21, 2008, less than one year after she executed the note and

mortgage, Ruby Hayes passed away. In her will, she devised the house to Judith

Hayes, who made the house her homestead.

On July 6, 2009, Bank of America, as the holder of the note and mortgage,

filed the first foreclosure action. The parties stipulated that that case was closed in

2013 for reasons not reflected in the record.

On September 18, 2014, over five years later, Appellee Reverse Mortgage

Solutions, as holder of the note and mortgage, filed the instant foreclosure action.

Following a non-jury trial, Judith Hayes moved to dismiss the case, arguing that

this foreclosure action was time-barred by the five-year statute of limitations. The

trial court entered a final judgment of foreclosure. Judith Hayes timely appealed.

II. STANDARD OF REVIEW

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 “[A] legal issue surrounding a statute of limitations question is an issue of

law subject to de novo review.” U.S. Bank Nat’l Ass’n v. Amaya, --- So. 3d ----,

No. 3D17-576, 2018 WL 3553905, at *2 (Fla. 3d DCA July 25, 2018) (quoting

Nationstar Mortg., LLC v. Sunderman, 201 So. 3d 139, 140 (Fla. 3d DCA 2015)).

III. ANALYSIS

In this case of first impression, Judith Hayes contends that the second

foreclosure action filed by Reverse Mortgage Solutions in 2014 was time-barred by

section 95.11(2)(c), Florida Statutes, because the cause of action accrued on the

date Ruby Hayes died in 2008. Alternatively, Judith Hayes contends that the cause

of action accrued upon the mortgagee’s acceleration of the reverse mortgage when

the first foreclosure action was filed in 2009. We disagree with both arguments. In

so holding, we find the crucial fact in this case is that the note does not mature

until November 25, 2079.

First, the statute of limitations does not run from the death of the borrower

because acceleration of the debt based on the death of the borrower is optional.

Paragraph 9 of the mortgage confers upon the mortgagee the right, but not the

obligation, to accelerate payment of the debt.1 For this reason, the occurrence of

the borrower’s death does not amount to the accrual of the foreclosure cause of

1As a result, this case is readily distinguishable from Wendover Financial Services
v. Ridgeway, 28 N.Y.S. 3d 535 (N.Y. 2016), which involved a mortgage with a
mandatory acceleration provision.

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action for purposes of the statute of limitations, it merely presents the mortgagee

with the opportunity to elect whether to accelerate payment and exercise its

foreclosure rights, or not. Should the mortgagee choose not to exercise that option,

the full amount of the debt would still be due upon maturation of the mortgage.

Second, under existing precedent, the statute of limitations does not run from

an interim acceleration associated with an unsuccessful foreclosure attempt in a

manner to bar a subsequent foreclosures filed within five years of the note reaching

maturity. The reasoning upon which this principle rests first emerged in the context

of res judicata and then was applied to the statute of limitations.

In Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004), the Supreme

Court of Florida held that “res judicata does not necessarily bar successive

foreclosure suits, regardless of whether or not [sic] the mortgagee sought to

accelerate payments on the note in the first suit.” Id. at 1008. The Court explained:

If res judicata prevented a mortgagee from acting
on a subsequent default even after an earlier
claimed default could not be established, the
mortgagor would have no incentive to make future
timely payments on the note. The adjudication of
the earlier default would essentially insulate her
from future foreclosure actions on the note—
merely because she prevailed in the first action.
Clearly, justice would not be served if the
mortgagee was barred from challenging the
subsequent default payment solely because he
failed to prove the earlier alleged default.

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 We must also remember that foreclosure is
an equitable remedy and there may be some
tension between a court’s authority to adjudicate
the equities and the legal doctrine of res judicata.
The ends of justice require that the doctrine of res
judicata not be applied so strictly so as to prevent
mortgagees from being able to challenge multiple
defaults on a mortgage. We can find no valid basis
for barring mortgagees from challenging
subsequent defaults on a mortgage and note solely
because they did not prevail in a previous
attempted foreclosure based upon a separate
alleged default.

Id. at 1007-08 (citation omitted).

In Deutsche Bank Trust Co. Americas v. Beauvais, 188 So. 3d 938 (Fla. 3d

DCA 2016), we followed the reasoning of Singleton to conclude the statute of

limitations does not act to bar successive foreclosure proceedings involving

conventional installment mortgages. Beauvais, 188 So. 3d at 943-44 (“Here we

follow that choice. And, as have numerous post-Singleton courts before us, we

apply this determination, while made in the context of a res judicata defense, to a

statute of limitations defense.”).

Shortly thereafter, the Supreme Court of Florida decided Bartram v. U.S.

Bank Nat. Ass’n., 211 So. 3d 1009 (Fla. 2016). There, the Court relied, in part, on

our decision in Beauvais to extend the reasoning set forth in Singleton concerning

defenses based on res judicata regarding successive foreclosures to defenses based

on statutes of limitations in successive foreclosures. Bartram, 211 So. 3d at 1017-

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22. The Court rejected the view that acceleration of a debt in a foreclosure action

involving a conventional mortgage with an optional acceleration clause and

reinstatement provision caused the statute of limitations to bar a successive

foreclosure proceeding. Id. at 1019-22.

Bartram, and this Court’s decision in Beauvais, conclude that the statute of

limitations does not bar the filing of a successive foreclosure action after dismissal

of a mortgage foreclosure action accelerating payment when the note has not yet

matured. Importantly, each of those cases rejected the view that an acceleration of

payments in a foreclosure that fails can form the basis for a statute of limitations

defense on a subsequent foreclosure based on a subsequent default during the life

of the note. To hold otherwise, the Supreme Court explained, would result in a

windfall to the borrower constituting “unjust enrichment or other inequitable

results.” Bartram, 211 So. 3d at 1017 (quoting Singleton, 882 So. 2d at 1007-08);

Beauvais, 188 So. 3d at 943-44.

While Singleton, Bartram, and Beauvais dealt with conventional mortgages,

their reasoning applies with equal force to the reverse mortgage in this case. Of

course, a reverse mortgage differs from a conventional mortgage because “a

reverse mortgage allows elderly homeowners to receive monthly payments from a

lender based upon the homeowners’ equity in their principal residence.” Smith v.

Reverse Mortg. Sols., 200 So. 3d 221, 222-23 (Fla. 3d DCA 2016) (citing Bennett

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v. Donovan, 703 F.3d 582, 584–85 (D.C. Cir. 2013)). “[I]n a reverse mortgage

arrangement, the lender makes monthly payments to the elderly homeowners, and

the homeowners’ obligation to repay the lender ripens only upon the homeowners’

death or when the homeowners move from their home.” Smith, 200 So. 3d at 223

(citing Bennett, 703 F.3d at 584–85).

But, the holdings of Bartram and Beauvais were based on the fact that: (1)

the mortgages at issue contained optional acceleration clauses; and (2) the notes

had definitive maturation dates. The reverse mortgage here has those two

characteristics.2 The plain language in Paragraph 9 creates an acceleration clause

that is neither automatic nor mandatory. It states that the mortgagee “may require

immediate payment in full,” upon the death of the mortgagor or the conveyance of

all of the mortgagor’s beneficial interest in the property to a non-mortgagor. See

Smith, 200 So. 3d at 225, 228-29 & n.12 (construing identical language as creating

2 The reverse mortgage at issue here also contains the type of a reinstatement
clause relied upon by the controlling cases. See, e.g., Bartram, 211 So. 3d at 1020-
22 (citations and internal quotations omitted) (“even after the optional acceleration
provision was exercised . . . the mortgagor was not obligated to pay the accelerated
sums due under the note until final judgment was entered and needed only to bring
the loan current . . . .[t]he lender’s right to accelerate is subject to the borrower’s
continuing right to cure.”); Beauvais, 188 So. 3d 946-53 (citation omitted) (“Stated
another way, despite acceleration of the balance due and the filing of an action to
foreclose, the installment nature of a loan secured by such a mortgage continues
until a final judgment of foreclosure is entered and no action is necessary to
reinstate it via a notice of ‘deceleration’ or otherwise. . . . [a]fter the dismissal . . .
the parties returned to the status quo that existed prior to the filing of the dismissed
complaint.”).

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a condition precedent to a mortgagee’s election to acceleration payment of the debt

and noting that nothing in the opinion “should be construed to limit Reverse

Mortgage Solutions’ ability to file a new foreclosure action upon the future

occurrence of any of the conditions precedent outlined in Paragraph 9 of the

subject mortgage.”).

In addition, the reverse mortgage in this case identifies a single, definitive,

and readily ascertainable maturation date – November 25, 2079.3 A decision by the

mortgagee to not exercise an option, or to dismiss an earlier filed foreclosure

proceeding, does not operate to bar the filing of a second foreclosure complaint at a

later date because the entire amount due and owing is not due until that date.

Unless the holder of the promissory note and mortgage in such a case reduces the

mortgage lien on the property to a final judgment of foreclosure, the time within

which the mortgagee may bring a foreclosure action under the mortgage agreement

will expire after the five-year statute of limitations has run under the date of

maturation. See § 95.11(2)(c), Fla. Stat.

Affirmed.

3 The case before us is distinguishable from Financial Freedom Senior Funding
Corp. v. Horrocks, 294 S.W. 3d 749, 754-56 (Tex. App. 2009) (concluding the date
of accrual began on the date of the borrower’s death because the note in that case
did not identify a date of maturation, however, in an attempt to interpret the
contract and identify a date of accrual, the court concluded that the conditions
created a readily ascertainable time for payment).

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