Florida Second Dca Reverses Foreclosure Judgment Amp Dismisses Case Based On Erroneous Evidentiary Ruling Setting Unfavorable Precedent


In March this year, the Second DCA issued a detailed twenty-page opinion on what seemed to be a very simple foreclosure case dealing with the issue of conditions precedent. Mace v. M&T Bank. In Mace, Kenneth and Janice Mace (“the Borrowers”) failed to pay their mortgage so M&T Bank (“the Bank”) initiated foreclosure proceedings against them. The matter proceeded to a non-jury trial where the Bank presented documentary evidence and testimony from its Assistant Vice President and Operations Manager, Shelly Andreas. The dispositive issue in the case and the sole issue addressed by the Second DCA in its written opinion pertained to the sufficiency of the Bank’s evidence that it satisfied conditions precedent.

At trial, in support of its complaint allegation that it satisfied conditions precedent, the Bank presented the default letter and the certified mail card, both of which were addressed to the Maces. However, the mail card was not dated or signed, and the return address on the card was for a third party, McCalla Raymer, LLC. The Court noted: “There were no markings or other indications on the document suggesting that it was filled out for purposes of mailing the default letters…or that it had in fact been mailed to the Maces.” The Bank’s witness, Ms. Andreas, testified that she was “personally involved” in sending the letter; however, the Court noted her personal involvement “consisted of (1) conversations with McCalla Raymer about the default letter and (2) records she had reviewed that…reflected that the letter had been sent…” The Bank did not introduce the referenced records into evidence nor did the Bank present evidence that it followed a “routine or ordinary practice” in sending out the default letter in the Maces’ case. The Maces raised hearsay objections to Ms. Andreas’ testimony, but the lower court overruled them allowing Ms. Andreas to testify that the default notice was sent to the Maces.

The Bank rested and the Maces moved for an involuntary dismissal based on the Bank’s failure to present sufficient evidence that the default notice was mailed. The lower court denied the motion and the defense presented its case. Mr. Mace testified he never received the default notice. At the end of trial, the lower court entered judgment for the Bank and the Maces appealed arguing the Bank’s evidence that it satisfied conditions precedent was legally insufficient because “it came from a witness without personal knowledge and was inadmissible hearsay.”

The Second DCA agreed with the Maces on that point and reversed the judgment noting the existence of the default notice standing alone was insufficient to demonstrate the letter was actually mailed and Ms. Andreas’ testimony regarding mailing was inadmissible hearsay because it was not based on personal knowledge or a routine procedure that Ms. Andreas personally knew was followed.

Simple enough; however, the complexities of this case begin at the end when the DCA remanded the matter for dismissal. Sixteen pages of the twenty-page opinion pertained to the DCA’s decision to dismiss the matter rather than remand for a new trial and more than half of that was Judge Black’s well-reasoned dissent.

The majority explained its decision to dismiss M&T’s foreclosure was founded on the “interest of finality and fairness” and the Courts “… ‘longstanding aversion to remanding’ a case for retrial when a party fails to prove its case in the first trial…” The Court noted the “default assumption against a retrial applied” because there were “no exceptional circumstances” which warranted giving M&T a “second bite at the apple.” The Court noted Ms. Andreas clearly lacked personal knowledge regarding the mailing of the default notice and there was no evidence that a routine practice for mailing the letters existed and was followed. Lastly, the Court concluded “we see nothing in our record to suggest that had the trial court [properly] excluded…[Ms. Andreas’ testimony regarding mailing of the default notice]…the Bank would have been prepared to present other admissible evidence of mailing…”

Although Judge Black agreed with the majority’s conclusion that Ms. Andreas’ testimony constituted inadmissible hearsay, he concluded that the Maces failed to present that specific evidentiary issue on appeal. Instead, the Maces argued their motion for involuntary dismissal should have been granted because the sufficiency of the evidence “was predicated upon inadmissible evidence.” Judge Black elaborated that the Maces did “not seek reversal premised on the trial court’s rulings as to the admissibility of Ms. Andreas’s testimony, the paragraph twenty-two notice, or the return receipt. As such, the Maces have waived an argument based on the validity of the trial court’s ruling on the admission of evidence.”

Based on this finding, Judge Black surmised that the majority failed to conduct the correct analysis on appeal. He explained that the majority improperly merged “two separate and distinct issues”, i.e., the issue of sufficiency of the evidence with the issue of admissibility of the evidence. Judge Black elaborated that when considering an argument based on sufficiency of the evidence the Court must “consider all of the evidence admitted below – properly or improperly – in determining whether the Bank presented sufficient evidence of its compliance with paragraph twenty-two of the mortgage…” Judge Black explained that viewing all the Bank’s evidence “in the light most favorable to the nonmoving party,” including Ms. Andreas’ improperly admitted testimony, denial of the motion for involuntary dismissal was proper. Since that was the only issue the Maces raised on appeal, the Bank’s judgment should have been affirmed. Judge Black went on to explain “a defendant is not entitled to dismissal…‘merely because evidence that is critical to the court’s finding of sufficiency was improperly admitted.’”

Lastly, Judge Black explained even if the Maces properly presented the issue of admissibility on appeal and the Court, as it did, concluded Ms. Andreas’ testimony regarding mailing of the default notice was improperly admitted hearsay, remand for a new trial, and not dismissal, was the appropriate remedy. Relying on several civil and criminal cases, Judge Black explained: “Where the error in admission of evidence is properly presented to this court and cannot be deemed harmless, reversal and remand for a new trial is required.” Judge Black concluded dismissal based on a letter determined erroneous evidentiary ruling results in unfair prejudice to the party who relied on the trial court’s ruling. The majority noted it expressly rejected that argument in Tracey when it concluded “a party’s arguable reliance on such a ruling does not entitle it to remand for a new trial a matter of law…[and] there is no legal basis for such a didactic approach to remand.” The majority explained that such detrimental reliance could be considered by the court when “determining whether exceptional circumstances justify remand for a new trial.”

Judge Black’s dissent is well-written and contains a compelling argument for retrial rather than dismissal. Unfortunately, most of the judges sitting in Florida’s second district disagreed with Judge Black’s analysis. Their resulting opinion is an unwelcome precedent on a “hotly contested matter in residential foreclosure cases”. Thankfully, its precedential value is limited to the trial courts within the Second DCA’s jurisdiction since other district courts of appeal have reached different conclusions on this issue.i Notably, Judge Black did identify an “inter- and intradistrict conflict” regarding the issue and requested that the following question be certified to the Florida Supreme Court: “CAN THE REVIEWING COURT DISREGARD ERRONEOUSLY ADMITTTED EVIDENCE IN REVIEWING THE ARGUMENT THAT INSUFFICIENT EVIDENCE SUPPORTING A CLAIM WAS PRESENTED BELOW?” Stay tuned!

i See a list of cases wherein other Florida district courts reached a different conclusion based on similar facts. Mace, at *21. Due to this inter- and intra-district conflict, trial courts are only bound by the precedent in their own appellate district. Miller v. State, 980 So. 2d 1092, 1094 (Fla. Dist. Ct. App. 2008) (internal citations omitted) (“The district courts of appeal in Florida are intended to be courts of final appellate jurisdiction, the opinion of a district court is binding on all trial courts in the state. If there is unresolved conflict between the district courts, the trial court is bound by the precedent in its own appellate district.”)