Key Point | FLORIDA APPELLATE COURT AGREES LENDER WAS COLLATERALLY ESTOPPED FROM SEEKING EQUITABLE RELIEF

1. Last month Florida’s Fourth DCA affirmed the lower court’s dismissal of an equitable action filed by lender, CSAB, against mortgagors Richard Clarke and Paula Prinsen (collectively, “the borrowers”). CSAB Mortg.-Backed Pass-Through Certificates, Series 2007-1 v. Clarke, 4D2023-2047, 2024 WL 4829805, at *1 (Fla. 4th DCA Nov. 20, 2024).
2. CSAB filed two actions against the borrowers. In the first action CSAB sought to foreclose and reform the borrowers’ mortgage.The court granted foreclosure but denied reformation due to a failure of proof on the issue. CSAB then filed an action for an equitable lien. The trial court dismissed the subsequent action finding the issue with the legal description had been fully litigated in the original foreclosure proceeding so the subsequent action was barred by collateral estoppel. The Fourth DCA agreed, affirming the dismissal on appeal.
3. This holding demonstrates the importance of understanding the issues raised by the pleadings and the burden of proof on those issues. Establishing the basis for reformation of a mortgage is not a difficult burden to satisfy; however, due to the redundant nature of foreclosure claims nuances like these are sometimes overlooked resulting in costly and unnecessary litigation.

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