Florida Court Reverses Dismissal Finding Bank Established Prima Facie Case For Foreclosure


Florida’s Second District Court of Appeals reversed a judgment of dismissal entered against US Bank and in favor of mortgagor Charles Engle (“Engle”) concluding the lower court erred when it held the bank failed to establish a prima facie case for foreclosure and reformation of the mortgage. U.S. Bank N.A. v. Engle, No. 2D18-3384, 2020 WL 4724511 (Fla. 2d DCA Aug. 14, 2020). By way of background, Engle was deeded property in 2003 and took out a $100,000 adjustable rate mortgage on that property in 2006. Due to a scrivener’s error, the plat book and page number reflected in the legal description of the mortgage were incorrect. The correct legal description as reflected on Engle’s 2003 warranty deed was “Plat Book 6, Page 10”; however, the mortgage reflected “Plat Book 5, Page 1.” In all other respects, the legal description in the mortgage was identical to the legal description in the 2003 warranty deed.

In 2008, Engle stopped making mortgage payments and US Bank initiated legal proceedings to foreclose its mortgage and reform the legal description of the mortgage. The matter proceeded to a non-jury trial where the bank presented documentary evidence and witness testimony establishing its standing to foreclose, satisfaction of conditions precedent, damages, and the basis for reforming the mortgage. Engle argued the Bank’s evidence was deficient on each of these issues.

As to standing, the Bank presented the original note which reflected two endorsements, a special endorsement and a blank endorsement. The original note was in the same condition as the copy attached to the Bank’s complaint. Engle argued this evidence was insufficient to establish standing at the inception of the case because the Bank failed to “prove that the special indorsement was placed onto the note before the blank indorsement.”

To demonstrate satisfaction of conditions precedent, the Bank presented collection notes and witness testimony which established a third-party vendor mailed out the demand letter. Engle argued this was insufficient, but the opinion does not explain why. For damages, the Bank proffered business records which showed the amounts due and that the interest rate remained at 8.05% for all pertinent times. Engle countered that this evidence was insufficient because it did not include “the index utilized to calculate the [variable] interest rate” and because the Bank’s witness did not offer specific testimony about the “pages [within the business records] concerning the interest rate…”

Lastly, to prove the parties intended the mortgage to be secured by Engle’s property, US Bank presented “three warranty deeds” which showed the mortgage was given by the same parties listed on the 2003 warranty deed. This evidence also demonstrated that the legal descriptions differed “by only a few digits- plat book 5 rather than 6 and page 1 rather than 10.” Engle argued this was insufficient to demonstrate the parties intended to encumber the subject property.

The lower court agreed with “all grounds stated by defense counsel” and entered an order of dismissal. US Bank appealed the order to the Second DCA which reached the opposite conclusion. Firstly, the Court explained the Bank’s status as a holder both at the inception of the case and at trial was sufficient to convey standing. Additional proof regarding the timing of the endorsements on the note was unnecessary since the note attached to the complaint and the note surrendered at trial were identical.

Secondly, the Court ostensibly found the Bank’s witness had sufficient personal knowledge of the process for sending out the demand letter to be a competent witness despite the fact a third-party vendor did the mailing.

Thirdly, the Court explained that even without the index showing interest rate fluctuations, the Bank was entitled to interest calculated “using the lowest rate” allowed under the terms of the note. Since the Bank calculated interest at 8.05%, no additional evidence regarding the interest rate was required to determine damages.

Lastly, regarding reformation, the Court concluded the warranty deeds and minimal deviation in the legal descriptions of the warranty deeds and mortgage, “considered collectively,” provided “some evidence of the parties intent to encumber the subject property” and was adequate to reform the mortgage. The Court distinguished a case relied upon by Engle where the legal description “was omitted entirely from the mortgage” and only an unsigned assignment of mortgage was proffered by the bank to support reformation.

The Court concluded dismissal was inappropriate since the Bank established a prima facie right to reform and foreclose the mortgage. The Court reversed the order of dismissal and remanded the matter for further proceedings. This opinion provides a helpful synopsis on the scope of evidence required to enforce a mortgage that contains a scrivener’s error.