Oppenheim Win Shows Five Year Statute is Still Alive
Five-Year Statute of Limitations Law still has a Few Lifelines Left in South Florida Foreclosures; Notwithstanding Bank-Friendly Opinion
The Third District Court of Appeal’s recent decision in Beauvais would suggest that the five-year statute of limitation does not apply to mortgage foreclosure actions. However, not all courts would agree.
Oppenheim Law recently secured a win in Port St. Lucie County for the five-year statute of limitations. Indeed, Judge William L. Roby entered judgment for the borrower based on our argument that the lender’s lawsuit was barred by the five-year statute of limitations. The Judge moved forward and allowed argument even though Bartram is still pending.
Acceleration and the lack of deceleration
The plaintiff sued our client to foreclose in 2008, alleging in its complaint that the entire amount under the loan was due and owing, and its lawsuit was dismissed without prejudice in 2012. Plaintiff then filed another lawsuit some five years and several days later, in response to which our client asserted the statute of limitations defense. Through a strategic, successful deposition, we were able to confirm the fact of acceleration and the lack of deceleration. Armed with this information, we asked the court to rule in our favor. Within twenty (20) minutes, we were able to obtain a ruling favorable to our client. Plaintiff forfeits its right to file suit on the borrowers note In finding in our client’s favor, the judge found that the Plaintiff did accelerate the loan when it filed the initial complaint declaring that the entire amount was due and owing, and then had only five years to bring a subsequent action to foreclose. Having failed to do so, the Plaintiff forfeited its right to file suit on the Note:
Having elected to accelerate the total amount due and owing on December 10, 2008, Plaintiff had five (5) years from that date in which to bring a subsequent action to foreclose on the Note.
Thus, to comply with the five-year statute of limitations, Plaintiff was obligated to file suit no later than December 10, 2013, to attempt re-foreclosure on the Note. However, Plaintiff did not file the Complaint in the 2013 Foreclosure Lawsuit until December 20, 2013, thereby missing the deadline by ten (10) days. The failure to timely re-file cut off Provident’s right to file suit on the Note.
Each new default date is a different cause of action
In so ruling, the Court specifically addressed—and dismissed—the Plaintiff’s argument that each new default date is a different cause of action:
The Plaintiff’s legal argument in its written and oral opposition to the Defendants’ Motion for Summary Judgment is that each new default date is a different cause of action; therefore, the Plaintiff asserts that it was authorized to sue on the September 1, 2008, default date because it differs from the default date alleged in the Complaint in the 2008 Foreclosure Lawsuit (August 1, 2008). However, having elected to accelerate the total amount due and owing under the Note via the Complaint in the 2008 Foreclosure Lawsuit, Plaintiff could not proceed in suing on another payment default as no future installment existed. The Plaintiff’s corporate representative explicitly testified in the deposition that acceleration occurred and that the Plaintiff treated the loan as accelerated from that time forward, even following the dismissal of the 2008 ForeclosureLawsuit. The corporate representative testified that Provident has no procedures in place to decelerate and that Provident did not take any affirmative action so as to indicate that it would accept anything less than the full amount due on the Note following acceleration . . . .
Outside of the five years rule
In ruling in our favor, the court adopted several of our arguments, including the fact that the plaintiff could not premise the second lawsuit on the particular default date alleged because the date was within the range of dates included in the first lawsuit. The court also acknowledged that the plaintiff could not sue upon the particular date of default alleged because it was literally outside of the five years immediately preceding the date of filing of the second lawsuit.
Five years is five years
The presiding judge recognized that the statute of limitations “is a purposefully inequitable legislative doctrine, intended to cut off an otherwise legally valid cause of action after a party has sat on their rights—unlike res judicata, which is an equitable judicial doctrine which should not always be enforced if it is inequitable for courts to do so. “ For that reason, “[i]f a party to a matter does not comply with the statute of limitations, it is responsible for the consequences, regardless of the fact that another party retains a benefit as a result of that non-compliance.”
The Court likened the situation to a contractor’s requirement to timely provide a homeowner with a final payment affidavit, a requirement in the area of construction lien law. The contractor’s failure to timely furnish such an affidavit entitles the owner to a dismissal of the contractor’s lien foreclosure lawsuit, “regardless of whether the contractor performed the work or the homeowner received the benefit of that work via an improvement to their property.” “Following this analogy . . . . the statute of limitations applicable to this action necessarily cuts off the Plaintiff’s right to foreclose, regardless of the fact that the Plaintiff at one point furnished funds to the Defendants.”
The Florida Five-Year Statute of Limitations Rule is Complex.
Light at the End of the Tunnel
The Third District Court of Appeal’s recent ruling in Beauvais turns the five-year statute of limitations on its head. It is not a good precedent for the borrower. However, regardless of all the bank-friendly fanfare, the statute of limitations as it applies to mortgage foreclosure actions clearly in South Florida still has a few lifelines left.
Our victory in St. Lucie, and the fact that the Beavauis opinion was, by far, not a unanimous decision (four out of ten judges dissented) reflects a pattern of judicial divisiveness over the applicability of the statute of limitations. With that divisiveness comes the potential for more borrower-friendly rulings, like the one we recently obtained in St. Lucie.
All we can say is, hold on to your hats and do not bet the ranch on this one.
From the Trenches