DANIEL LEWIS and ROSANNA LEWIS v. US BANK NATIONAL ASSOC., ETC.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

DANIEL LEWIS and ROSANNA LEWIS,
Appellants,

v.

US BANK NATIONAL ASSOCIATION, ET AL.,
Appellee.

No. 4D19-942

[June 17, 2020]

Appeal from the Circuit Court for the Nineteenth Judicial Circuit, St.
Lucie County; Lawrence Michael Mirman, Judge; L.T. Case No.
2017CA001120.

W. Trent Steele of Steele Law, Hobe Sound, for appellants.

Steven J. Brotman and Douglas R. Sargent of Locke Lord LLP, West
Palm Beach, for appellee.

MAY, J.

The bank’s failure to prove its case requires us to reverse this
foreclosure judgment. The borrowers argue the bank failed to reestablish
the lost note and failed to prove standing. We agree and reverse.

The bank sued the borrowers to foreclose the mortgage and reestablish
the lost note. A copy of the lost note attached to the complaint showed the
borrowers signed the note to the original lender, Bank of America. The
copy was neither endorsed in blank, nor made payable to the bank.

The complaint alleged the bank was either in possession of the note
when lost or had been assigned the right to enforce the lost note by an
entity in possession at the time of its loss. The complaint included two
mortgage assignments. The first was from Bank of America to Nationstar,
dated June 29, 2013. The second assignment was from Nationstar to the
bank, dated June 2, 2016. The second assignment did not assign the note,
but rather “all interest secured thereby.”

The bank attached an erroneous lost note affidavit signed by the vice-
president of Rushmore Loan Management Services. The lost note affidavit
attested that a different entity, Wilmington Savings Fund Society, was the
present owner entitled to enforce the note. It also included a chart
outlining the note’s transfer that did not match the entities involved in the
transfer of the note in this case. They were:

• HomeBanc Mortg. Corp. by assignment.
• MERS by assignment.
• EMC Mortg. Corp. by lost note affidavit.
• JP Mortg. Chase Bank, Nat’l Ass’n by corrective
assignment.
• Fed. Nat’l Mortg. Ass’n by assignment.
• Wilmington Savings Fund Society by assignment.

The borrowers moved to dismiss the complaint. The bank filed an
amended complaint, which included a corrective assignment of the
mortgage and three new lost note affidavits. The corrective assignment
expressly assigned the note and mortgage from Nationstar to the bank,
dated April 28, 2018. The three lost note affidavits included: two affidavits
by Bank of America, and a new lost note affidavit by Rushmore that
corrected the note’s chain of title from the prior affidavit (“second lost note
affidavit”).

The second lost note affidavit attested:

a) Assignment/Transfer: [Bank of America] to [Nationstar]

b) Assignment/Transfer: [Nationstar] to [bank].

The second lost note affidavit and the two Bank of America affidavits
provided neither the dates of the note’s transfers, nor established that
Bank of America was entitled to enforce the note when lost.

The borrowers moved to dismiss the bank’s amended complaint. The
trial court denied the motion. The borrowers answered and asserted the
bank’s lack of standing as an affirmative defense.

The case proceeded to a bench trial. The bank called two witnesses: 1)
an employee of Bank of America and Nationstar; and 2) a Rushmore
employee. Through their testimony, the bank admitted:

• the assignment of the note and mortgage from Bank of
America to Nationstar,

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 • the assignment of the mortgage from Nationstar to the
bank,
• the corrective assignment of the note and mortgage from
Nationstar to the bank,
• payment histories for each loan servicer,
• hello/goodbye letters,
• notices of servicing transfer and sale of ownership,
• the bank’s power of attorney appointing Rushmore as its
attorney, and
• the second lost note affidavit.

At the end of the bank’s case, the borrowers moved for a judgment of
dismissal. They argued the bank failed to prove who lost the note, when
it was lost, and who had the right to enforce the note when it was lost.
The borrowers argued the bank’s corrective assignment of the note and
mortgage could not establish standing because it was dated after the
complaint was filed. The trial court denied the motion and entered the
foreclosure judgment. The borrowers moved for rehearing; the court
denied the motion. The borrowers now appeal.

We have de novo review of the standing issue. Boyd v. Wells Fargo
Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA 2014).

The borrowers argue the bank did not have standing to foreclose the
mortgage because it did not reestablish the lost note, pursuant to section
673.3091, Florida Statutes; and it cannot rely on its corrective assignment
of mortgage to establish standing. The bank responds it reestablished the
lost note and its corrective mortgage assignment established standing.

A plaintiff “must prove that it had standing to foreclose when it filed the
complaint.” Cartwright v. LJL Mortg. Pool, LLC, 185 So. 3d 614, 615 (Fla.
4th DCA 2016). “A party may establish standing by showing that it was
entitled to enforce the note at the time it filed suit.” JPMorgan Chase Bank
Nat’l Ass’n v. Pierre, 215 So. 3d 633, 636 (Fla. 4th DCA 2017) (quoting U.S.
Bank Nat’l Ass’n v. Becker, 211 So. 3d 142, 144 (Fla. 4th DCA 2017)).

“A person entitled to enforce an instrument is: (1) [t]he holder of the
instrument; (2) [a] nonholder in possession of the instrument who has the
rights of a holder; or (3) [a] person not in possession of the instrument who
is entitled to enforce the instrument pursuant to s[ections] 673.3091 or []
673.4181(4), [Florida Statutes].” Id. (quoting Becker, 211 So. 3d at 144)
(first and second alterations in original). Standing may also be established
“by either an assignment or an equitable transfer of the [note and]

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mortgage prior to the filing of the complaint.” McLean v. JP Mortgan Chase
Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012).

The borrowers argue the bank failed to reestablish possession of the
lost note under section 673.3091, Florida Statutes, because it did not
prove that it directly or indirectly acquired the note from an entity with the
right to enforce the note when it was lost. They suggest the bank’s
evidence was incomplete, conflicting, and failed to establish the note’s
chain of title.

The bank responds it reestablished the lost note because it was not
required to explain how the note was lost. Even so, the assignments of the
note and trial testimony established the note’s chain of title. We disagree.

“A trial court’s determination of whether a party has reestablished a
lost note is reviewed for sufficiency of the evidence.” Home Outlet, LLC v.
U.S. Bank Nat’l Ass’n, 194 So. 3d 1075, 1077 (Fla. 5th DCA 2016). “An
appellate court may reverse on finding a failure of proof.” Id.

Where a promissory note is lost, destroyed, or stolen, section 673.3091,
provides:

(1) A person not in possession of an instrument is entitled to
enforce the instrument if:

(a) The person seeking to enforce the instrument was
entitled to enforce the instrument when loss of
possession occurred, or has directly or indirectly
acquired ownership of the instrument from a person
who was entitled to enforce the instrument when loss
of possession occurred;

Id.

“A party seeking to reestablish a lost note may meet the statutory
requirements ‘either through a lost note affidavit or by testimony from a
person with knowledge.’” Sabido v. Bank of N.Y. Mellon, 241 So. 3d 865,
866 (Fla. 4th DCA 2017) (quoting Home Outlet, LLC, 194 So. 3d at 1078).

The lost note affidavit or testimony need not “establish ‘exactly when,
how, and by whom the note was lost.’” Sabido, 241 So. 3d at 867 (quoting
Boumarate v. HSBC Bank USA, N.A., 172 So. 3d 535, 537 (Fla. 5th DCA
2015)). It must, however, prove the party seeking reestablishment of the
note acquired ownership from a party with the right to enforce the note

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when lost. Id. At a minimum then, the evidence must establish who had
the right to enforce the note when it was lost and how the party seeking
reestablishment obtained ownership. Id.

Here the bank’s evidence failed to prove that the bank acquired
ownership from a party entitled to enforce the note at the time it was lost.
The ownership chain was Bank of America, Nationstar, and the bank.
Although the bank presented three assignments and testimony
establishing the chain of title, the evidence did not establish that Bank of
America—the last party in possession of the note—was entitled to enforce
the note when it was lost.

The bank’s first lost note affidavit attests to a chain of assignments that
directly conflict with those attested to in the second lost note affidavit.
Even if the two were consistent, none of the lost note affidavits attest that
Bank of America was entitled to enforce the note when it was lost. See
Sabido, 241 So. 3d at 867. Like the affidavit in Sabido, the affidavits only
provided “[o]n information and belief, after due diligence, possession of the
note cannot reasonably be obtained because the Note was destroyed, its
whereabouts cannot be determined, or it is in the wrongful possession of
an unknown person.” And, neither witness could fill in the missing
information.

Because the bank failed to establish that it acquired ownership of the
note from a party entitled to enforce it at the time it was lost, the trial court
erred in finding the note was reestablished. See, e.g., Wells Fargo Bank,
N.A. v. Robinson, 168 So. 3d 1279 (Fla. 5th DCA 2015).

The borrowers next argue the trial court erred in finding that the
corrective assignment of mortgage transferred the note to the bank
because the word “note” was not included in the original assignment of
mortgage, and the corrective assignment could not be given retroactive
effect. The bank responds the evidence established Nationstar transferred
the note to the bank and the corrective assignment of the mortgage was
dated prior to the suit’s inception.

“[A]n assignment of mortgage, even if executed before the foreclosure
action commenced, is insufficient to prove standing where the assignment
reflects transfer of only the mortgage, not the note.” Tilus v. AS Michai
LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015).

Here, the bank introduced two assignments from Nationstar to the
bank. The first assigned the mortgage “with all interest secured thereby.”
The corrective assignment included both the mortgage and the note, but

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was dated after commencement of the foreclosure action. A trial court
cannot retroactively convey standing because “[a] plaintiff’s lack of
standing at the inception of the case is not a defect that may be cured by
the acquisition of standing after the case is filed and cannot be established
retroactively by acquiring standing to file a lawsuit after the fact.” Monnot
v. U.S. Bank, Nat’l Ass’n, 188 So. 3d 896, 901 (Fla. 4th DCA 2016) (quoting
LaFrance v. U.S. Bank Nat’l Ass’n, 141 So. 3d 754, 756 (Fla. 4th DCA
2014)).

Because the bank failed to prove the original lender, Bank of America,
was entitled to enforce the note when it was lost, the trial court erred in
finding the bank proved standing and entering the foreclosure judgment.

Reversed.

WARNER and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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