DIAZ ANSELMO & ASSOCIATES CELEBRATES A BIG WIN ON THE ISSUE OF STANDING IN A LOST NOTE CASE

Our firm is still reveling in last month’s victory wherein the Second DCA reversed a judgment entered in favor of the mortgagors and against the lender, US Bank. U.S. Bank Tr., N.A. as trustee for LSF9 Master Participation Tr. v. Rodriguez, No. 2D2023-1694, 2024 WL 4862520, at *1 (Fla. 2d DCA Nov. 22, 2024)[i]. On appeal of the adverse judgment, the Second DCA determined that the trial court’s finding that US Bank failed to establish it was entitled to enforce Rodriguez’s note, which was lost, was erroneous and warranted reversal.

After a bench trial on the merits of US Bank’s foreclosure and lost note claims, the trial court found that US Bank had standing to foreclose at the inception of the case because US Bank physically possessed the endorsed note prior to filing the complaint. However, the trial court concluded that US Bank failed to establish its standing at the time of trial because by that time US Bank had lost the note. According to the court, US Bank failed to proffer sufficient evidence at trial to satisfy the statutory requirements[ii] for re-establishing and enforcing the lost note.

The trial court reasoned that because US Bank’s witness could not explain “how the note was lost, or the circumstances surrounding its loss” US Bank could not demonstrate that it was  entitled to enforce the lost note under section 673.3091.[iii] Based primarily on that finding, the trial court entered judgment for the mortgagors and US Bank appealed.[iv] On appeal, the Second DCA found error in the court’s ruling explaining that the trial court “placed a loftier burden on U.S. Bank than [§ 673.3091] requires.”

Notably, in the judgment under appeal the trial court acknowledged that US Bank established its standing to foreclose at the inception of the case (through evidence of an unbroken chain of ownership from the loan originator). However, the court found the evidence of US Bank’s standing at the time of trial to be deficient. The DCA explained that finding constituted reversible error because evidence of an unbroken chain of ownership establishes that any entity in the unbroken chain would have the right to enforce the note “at any given time.”[v] The DCA explained under those circumstances § 673.3091 does not require proof of when, how or by whom the note was lost.

The Court also pointed out that the homeowner failed to contradict US Bank’s evidence “or suggest there was any other owner who could enforce the note.” The DCA surmised US Bank’s evidence of standing both at the inception of the case and at the time of trial was sufficient. The DCA reversed the judgment for the defendants and remanded the matter for further proceedings. The mortgagors did not move for rehearing so the decision became final on December 9, 2024, and will be no longer appealable as of December 23, 2024.

[i] Subsequent references to or quotations from this case are to this citation until indicated otherwise.

[ii] The Statutory requirements for re-establishing and enforcing a lost note are codified at § 673.3091, Fla. Stats.

[iii] Rodriguez, at *2.

[iv] Rodriguez, at *1. All subsequent references or quotations to this case are to this citation unless indicated otherwise.

[v] Rodriguez, at *2 (quoting Wilmington Sav. Fund Soc’y v. Charm-B, Inc., 363 So. 3d 1119, 1121 (Fla. 2d DCA 2023)).