USCA11 Case: 22-12584 Document: 21-1 Date Filed: 09/26/2023 Page: 1 of 14
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-12584
Non-Argument Calendar
____________________
In re: MICHAEL D. LYNCH,
CANDENCE B. LYNCH,
Debtors.
___________________________________________________
MICHAEL D. LYNCH,
CANDENCE B. LYNCH,
Plaintiffs-Appellants,
versus
OCWEN LOAN SERVICING, LLC,
DEUTSCHE BANK NATIONAL TRUST COMPANY,
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2 Opinion of the Court 22-12584
Defendants-Appellees.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:20-cv-22231-MGC
____________________
Before LAGOA, ABUDU, and ANDERSON, Circuit Judges.
PER CURIAM:
Michael and Candence Lynch (“the Lynches”) appeal the
district court’s affirmance of a bankruptcy court’s grant of sum-
mary judgment in favor of the appellees in an adversary proceeding
they filed against a loan servicer. GMAC Mortgage LLC
(“GMACM”) originally serviced the loan, before transferring it to
Ocwen Loan Servicing, LLC (“Ocwen”).
On appeal, the Lynches argue that the bankruptcy court im-
properly denied their motion to stay, and that the district court
erred in granting summary judgment in favor of the appellees on
two counts. For the reasons outlined below, we affirm.
I. FACTUAL BACKGROUND & PROCEDURAL
HISTORY
A. The Mortgage
In 2004, the Lynches purchased a residential property in Mi-
ami, Florida (the “Property”), which they financed with a mortgage
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22-12584 Opinion of the Court 3
from New Century Mortgage Corporation (“New Century”), as
evidenced by a promissory note (the “Note”). The Note was se-
cured by the mortgage, through which the Lynches conveyed to
New Century an interest in the Property. Shortly thereafter, New
Century transferred the mortgage to GMACM and, in 2007, New
Century filed for Chapter 11 bankruptcy.
The mortgage contained a provision waiving the necessity
of creating and maintaining an escrow account. It stated that, in
the event of such waiver, GMACM could revoke the waiver at any
time so long as GMACM gave the Lynches notice and that, upon
such revocation, the Lynches would be required to reimburse
GMACM the amounts it expended on the Lynches’ behalf. The
mortgage also stated that, should the Lynches fail to perform the
covenants and agreements set forth in the mortgage and corre-
sponding documents, GMACM could do and pay for whatever was
reasonable and appropriate to protect its interests in the Property.
Moreover, the mortgage explained that any forbearance by
GMACM in exercising its rights or remedies would not constitute
a waiver of its rights or remedies.
Mr. Lynch signed a document containing a waiver of an es-
crow account, which warned the couple that if they were delin-
quent in paying their hazard insurance premiums, GMACM could
require them to pay impounds. Mr. Lynch also signed another doc-
ument which warned that, if GMACM did not receive valid proof
of insurance, a hazard insurance policy would be forcibly placed on
the property.
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4 Opinion of the Court 22-12584
Notwithstanding these provisions, the Lynches failed to pro-
vide evidence of insurance coverage on the Property on three sep-
arate occasions. In each instance, GMACM, after giving the
Lynches notice of their insurance coverage delinquencies, obtained
lender placed insurance (“LPI”) on the Property. In the first two
instances, GMACM obtained LPI, but ultimately cancelled the pre-
mium without requiring payment from the Lynches after the
Lynches provided proof of insurance.
On the third instance, in 2011, GMACM sent the Lynches
two notices informing them that if GMACM did not receive proof
of hazard insurance on the Property, GMACM would create an es-
crow account and use those funds to purchase LPI and the Lynches
would ultimately have to cover the LPI costs. Although GMACM
gave the Lynches a total of 93 days to provide proof of hazard in-
surance on the Property, the Lynches failed to provide such proof,
prompting GMACM to obtain LPI on the Property and establish an
escrow account. Approximately 43 days after GMACM purchased
LPI for the Property, the Lynches provided proof of insurance and
GMACM canceled the LPI. Notwithstanding the LPI cancellation,
the Lynches still had an escrow shortage of over $600.
Then, in July 2012, the Lynches filed a pro se petition for
Chapter 7 bankruptcy relief in the Southern District of Florida’s
bankruptcy court. In their initial bankruptcy filings, they listed the
Property as an asset and identified GMACM as the primary lender.
In August 2013, the Lynches declared their intent to remain on the
Property and to maintain the mortgage.
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B. Adversary Complaints & Appeals
In September 2013, the Lynches filed their first adversary
complaint against GMACM, Ocwen, and Deutsche Bank National
Trust Co. (“Deutsche Bank”), as Trustees for certain New Century
assets (collectively, “the appellees”). In their complaint, they con-
tended that GMACM erroneously claimed on several occasions
that the Lynches had not provided proof of hazard insurance for
the Property, as the mortgage required, and that GMACM’s contin-
ued obtainment of LPI interfered with their right to pay their in-
surance premium without an escrow account.
In their first adversary complaint, the Lynches noted that
they had jointly filed for Chapter 7 bankruptcy in 2012, but
GMACM did not file a claim or objection and, in February 2013,
GMACM transferred the servicing rights to their loan to Ocwen.
Then, Ocwen attempted to collect on a debt related to the preced-
ing, which the bankruptcy court had already discharged.
Overall, as relevant to the current appeal, the Lynches as-
serted two counts challenging GMACM’s revocation of the mort-
gage’s escrow waiver provision. In Count 1, the Lynches argued
that GMACM and Ocwen committed “Mortgage Servicing
Abuse,” and in Count 2, they alleged that they were entitled to a
waiver of the escrow account requirement and that GMACM
breached their agreement.
Before the bankruptcy court could resolve the first adversar-
ial complaint, the Lynches filed a second adversary proceeding
against the appellees which challenged the overall enforceability of
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6 Opinion of the Court 22-12584
the Note. The appellees moved for summary judgment on the
Lynches’ claims in the second adversary proceeding, which the
bankruptcy court granted in June 2017. The Lynches administra-
tively appealed, and the district court affirmed in November 2017.
The Lynches then appealed to this Court, where we affirmed the
bankruptcy court’s ruling. Lynch v. Deutsche Bank Nat’l Trust Co. (In
re Lynch), 755 F. App’x 920 (11th Cir. 2018) (unpublished).
C. Summary Judgment & Motion to Stay in the First
Adversarial Proceeding
Once the proceedings on the second adversarial complaint
concluded, in 2019, the appellees moved for summary judgment as
to the Lynches’ remaining two claims in their first adversary pro-
ceeding arguing, as relevant here, that GMACM had the right to
create an escrow account on the loan after the Lynches repeatedly
failed to provide evidence of insurance coverage.
In support of their motion, the appellees attached an affida-
vit from Richard Schwiner, a Senior Loan Analyst for Ocwen.
Schwiner stated that he was among the individuals who had cus-
tody and control of Ocwen’s business records regarding the
Lynches’ loan. He stated that the records had been made “at or
near the time of the events underlying the subject indebtedness,
and recorded by a person with knowledge of the events and
charged with the responsibility of recording such events” and were
“kept in the ordinary course of Ocwen’s regularly conducted busi-
ness activities.” Schwiner attested that the affidavit was given
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22-12584 Opinion of the Court 7
based on his personal knowledge and after a review of the business
records.
The Lynches did not immediately oppose the appellees’ mo-
tion for summary judgment. Instead, on the date upon which dis-
positive motions were due, the Lynches moved to stay the disposi-
tive motion deadline and pretrial conference for 15 months. In sup-
port, they stated that they intended to move the bankruptcy court
in Delaware to reopen New Century’s 2007 Chapter 11 case. They
claimed that they intended to file an adversary complaint in that
case to challenge the validity and enforceability of the Note and
documents that the bankruptcy court had rejected in their second
adversary proceeding. The appellees opposed the Lynches’ mo-
tion.
Following a hearing on the motion for summary judgment
and the motion to stay, the bankruptcy court denied the motion to
stay. Then, in May 2020, the bankruptcy court granted summary
judgment in favor of the appellees on the remaining counts of the
Lynches’ first adversary complaint, relying in part on the Schwiner
affidavit and records attached to the motion. The bankruptcy court
entered an order to this effect in May 2020, and the Lynches timely
appealed to the district court.
Before the district court, the Lynches argued that the bank-
ruptcy court erred in granting summary judgment in favor of
GMACM. They asserted, for the first time, that the Schwiner affi-
davit constituted inadmissible hearsay. With respect to the stay,
they argued that the bankruptcy court’s denial deprived them of
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8 Opinion of the Court 22-12584
their rights to due process and equal protection because they lacked
resources to simultaneously proceed in two different courts.
The district court found the affidavit admissible and affirmed
the grant of summary judgment in favor of the appellees. How-
ever, the court ruled that it lacked jurisdiction to consider the bank-
ruptcy court’s denial of the motion to stay because the Lynches’
appeal of that order was untimely. The Lynches filed a motion for
reconsideration arguing, for the first time, that the appellees
breached an implied covenant of good faith and fair dealing. They
did not, however, challenge the bankruptcy court’s denial of their
motion for a stay. The district court denied the Lynches’ motion
for reconsideration, and the Lynches now appeal that lower court
decision.
II. DISCUSSION
We liberally read briefs filed by pro se litigants. Timon v.
Sampson, 518 F.3d 870, 874 (11th Cir. 2008). Moreover, we may af-
firm on any ground supported by the record, regardless of the
ground stated in the district court’s order or judgment. In re Beland,
989 F.3d 919, 922 (11th Cir. 2021).
A. Motion to Stay
On appeal, the Lynches maintain that the bankruptcy court
abused its discretion in denying their motion for a stay.
As noted, we may affirm the district court’s decision “for any
reason supported by the record, even if not relied upon by the dis-
trict court[.]” Worthy v. City of Phenix City, 930 F.3d 1206, 1216 (11th
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22-12584 Opinion of the Court 9
Cir. 2019) (quoting Allen v. USAA Cas. Ins. Co., 790 F.3d 1274, 1278
(11th Cir. 2015)). This is true even in circumstances when the dis-
trict court dismisses an issue on jurisdictional grounds as opposed
to on the merits. See id. at 1216-17 (holding that, although the dis-
trict court erred in concluding that the appellants lacked standing,
affirmance was still appropriate because it was supported by the
record). Indeed, the “prevailing party is entitled to defend its judg-
ment on any ground preserved in the district court[.]” Id. at 1216
(quoting Molina v. Aurora Loan Servs., LLC, 635 F. App’x 618, 623
(11th Cir. 2015) (unpublished) (holding that the district court erred
in dismissing a claim for lack of subject-matter jurisdiction, but
nevertheless affirming the dismissal because it was supported by
the record)).
“We review de novo questions concerning the jurisdiction of
the district court.” United States v. Oliver, 148 F.3d 1274, 1275 (11th
Cir. 1998). Whether a notice appealing a bankruptcy court's order
is timely presents a jurisdictional question. In re Ocean Warrior, Inc.,
835 F.3d 1310, 1318 (11th Cir. 2016). An appeal from a final judg-
ment presents for review all preceding non-final orders that pro-
duced it. Barfield v. Brierton, 883 F.2d 923, 930-31 (11th Cir. 1989).
Generally, a final order is one that ends the litigation on the merits,
leaving nothing to be done but to execute the judgment. Barben v.
Donovan (In re Donovan), 532 F.3d 1134, 1136 (11th Cir. 2008).
Where a court stays proceedings on its own docket, such ac-
tion is under the court’s inherent powers to regulate the admin-
istration of its own business. Castanho v. Jackson Marines, Inc., 650
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10 Opinion of the Court 22-12584
F.2d 546, 548 (5th Cir. Unit A June 1981); see also Landis v. N. Am.
Water Works & Elec. Co., 299 U.S. 248, 254 (1936) (“[T]he power to
stay proceedings is incidental to the power inherent in every court
to control the disposition of the causes on its docket[.]”). We re-
view a lower court’s exercise of its discretionary authority to stay
proceedings before it for an abuse of discretion. CTI-Container Leas-
ing Corp. v. Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982). This
standard of review is highly deferential and extremely limited, and
an abuse of discretion may only be found when the bankruptcy
court fails to apply the proper legal standard or fails to follow
proper procedures in making its determinations. Law Sol. of Chi.
LLC v. Corbett, 971 F.3d 1299, 1304-05 (11th Cir. 2020).
Here, the district court erred in concluding that it lacked ju-
risdiction to review the bankruptcy court’s denial of the Lynches’
motion to stay the proceedings. The denial of the motion to stay
did not end the litigation on the merits. Instead, the bankruptcy
court did not enter its final order until after it granted summary
judgment in favor of the appellees. Thus, the Lynches’ appeal from
the final judgment brought up for review all preceding non-final
orders that produced it, including the motion to stay. Barfield, 883
F.2d at 930-31.
The Lynches sought to stay the proceedings before the bank-
ruptcy court because they intended to belatedly challenge, yet
again, an unfavorable bankruptcy court decision that the district
court and this Court have already affirmed. See In re Lynch, 755 F.
App’x at 926. The bankruptcy court acted within its inherent
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22-12584 Opinion of the Court 11
discretionary authority when it denied the motion. Thus, the bank-
ruptcy court did not abuse its discretion in denying the stay. Law
Sol. of Chi. LLC, 971 F.3d at 1304-05. As such, we affirm on this
issue.
B. Motion for Summary Judgment
The Lynches also argue that the bankruptcy court erred in
granting the appellees’ motion for summary judgment on Counts
1 and 2. They contend that the bankruptcy court erroneously re-
lied on the Schwiner affidavit because it was not a properly authen-
ticated business record and, thus, constituted inadmissible hearsay.
They also argue that they adequately pled a claim for breach of the
implied covenant of good faith and fair dealing, and assert that
GMACM breached the contract first, and therefore waived its right
to revoke the escrow waiver provision.
We, as a second court of review of a bankruptcy court’s de-
cisions, independently examine that court’s factual and legal deter-
minations, applying the same standards of review as the district
court. In re Int’l Admin. Serv., Inc., 408 F.3d 689, 698 (11th Cir. 2005).
Where the district court has made no factual findings in its function
as an appellate court, our review is de novo. Id. We review de novo
any determinations of law and review the bankruptcy court’s fac-
tual findings for clear error. Id. Nevertheless, neither we nor the
district court may make independent factual findings. Law Sol. of
Chi. LLC, 971 F.3d at 1304. Importantly, we generally decline to
review issues on appeal that a party did not first raise with the
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bankruptcy court. Ala. Dep’t of Econ. & Cmty. Affs. v. Ball Healthcare-
Dallas, LLC (In re Lett), 632 F.3d 1216, 1226 (11th Cir. 2011).
Summary judgment is appropriate when the evidence,
viewed in the light most favorable to the nonmoving party, presents
no genuine issue of material fact and compels judgment as a matter
of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986). The Federal Rules of Bankruptcy Procedure incor-
porate by reference the summary judgment standard from the
rules of civil procedure and apply that same standard in adversary
proceedings. Fed. R. Bankr. P. 7056.
A statement that is otherwise inadmissible hearsay is admis-
sible as a business record if it is a record of an event and: (1) was
made at or near the time of the event by someone with knowledge;
(2) was kept in the course of a regularly conducted business activ-
ity; (3) making the record was a regular practice of that activity;
and (4) those conditions are shown by the testimony of the custo-
dian of the records or another qualified witness. Fed. R. Evid.
803(6). The “qualified witness” need not himself have prepared the
documents, “so long as other circumstantial evidence and testi-
mony suggest their trustworthiness.” Itel Cap. Corp. v. Cups Coal Co.,
707 F.2d 1253, 1259 (11th Cir. 1983). Reliability is the “touchstone
of admissibility” under Rule 803(6) and the district court has “broad
discretion” to admit evidence under this rule. United States v.
Arias-Izquierdo, 449 F.3d 1168, 1183 (11th Cir. 2006) (quoting United
States v. Bueno-Sierra, 99 F.3d 375, 378-79 (11th Cir. 1996)).
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Florida law recognizes an implied covenant of good faith
and fair dealing in every contract. Burger King Corp. v. Weaver, 169
F.3d 1310, 1315 (11th Cir. 1999); QBE Ins. Corp. v. Chalfonte Condo.
Apartment Ass’n, Inc., 94 So. 3d 541, 548 (Fla. 2012). The implied
covenant is intended to protect “the reasonable expectations of the
contracting parties in light of their express agreement.” QBE Ins.
Corp., 94 So. 3d at 548 (quoting Barnes v. Burger King Corp., 932 F.
Supp. 1420, 1438 (S.D. Fla. 1996)). However, an exception exists
where application of the covenant would contravene the express
terms of the agreement. Id. Further, under Florida law, a material
breach excuses a party from performance of the contract, although
the injured party may waive the breach. MDS (Canada) Inc. v. Rad
Source Techs., Inc., 720 F.3d 833, 852 (11th Cir. 2013).
Here, as an initial matter, the issues of whether Schwiner’s
affidavit contained inadmissible hearsay, GMACM violated the im-
plied covenant of good faith and fair dealing, and GMACM waived
its right to revoke the escrow waiver, are not properly before us
because the Lynches failed to raise these arguments before the
bankruptcy court. In re Lett, 632 F.3d at 1226.
Nevertheless, considering the Lynches’ pro se status and be-
cause our general rule barring review is non-jurisdictional, we will
review these claims on the merits. First, the bankruptcy court did
not clearly err in relying on Schwiner’s affidavit because Schwiner
properly authenticated the business records upon which he relied.
Itel Cap. Corp., 707 F.2d at 1259; see also Fed. R. Evid. 803(6).
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14 Opinion of the Court 22-12584
Second, the Lynches’ argument related to the implied cove-
nant of good faith and fair dealing fails because the plain language
of the mortgage gave GMACM the discretion to grant the Lynches
a waiver of the requirement to pay into an escrow account, and it
allowed GMACM to revoke the waiver at any time subject to a no-
tice requirement. Thus, to adopt the Lynches’ argument would
improperly override the express contractual provision for revoca-
tion of the escrow waiver. QBE Ins. Corp., 94 So. 3d at 548.
Finally, the Lynches’ argument that GMACM waived the
right to require the creation of an escrow account is meritless.
Their reliance on the first breach rule is misplaced as there is no
indication that GMACM ever ceased performance under the con-
tract, let alone that any breach was material. MDS (Canada) Inc.,
720 F.3d at 852. Further, the record does not support a finding that
GMACM waived its right to revoke the escrow waiver provision as
it repeatedly sent the Lynches notices about their failure to provide
insurance. This conclusion is also supported by the mortgage’s
plain language, which provided that any forbearance by GMACM
in exercising its rights would not be considered a waiver of such
rights. Accordingly, we affirm as to the district court’s grant of
summary judgment.
III. CONCLUSION
Based on the foregoing, the district court’s rulings are
AFFIRMED.