By Jennifer Lima-Smith
The Florida Supreme Court recently granted certiorari in Bartram v. U.S. Bank, N.A., 140 So. 3d 1007 (Fla. 5th DCA 2014), cert. granted, to consider whether a mortgage foreclosure action was time-barred where it was brought more than five years after an earlier foreclosure action, which sought to accelerate a note, was dismissed without prejudice. In the meantime, two federal district courts have ruled on that very issue: the Southern District of Florida in Summerlin Asset Management V Trust v. Jackson, 2015 WL 4065372 (S.D. Fla. Jul. 2, 2015); and the Middle District of Florida in Stern v. Bank of America Corp., 2015 WL 3991058 (M.D. Fla. Jun. 30, 2015). The decisions in Summerlin and Stern may provide some guidance for courts until the Florida Supreme Court’s decision in Bartram, which is set for oral argument in November.
In Bartram, U.S. Bank sued to foreclose its mortgage because Bartram defaulted on his loan obligations to the bank. According to the court, the bank had satisfied all conditions to accelerate the loan. But that foreclosure action was ultimately dismissed because the bank failed to appear at a pre-trial conference. Bartram later filed a declaratory judgment action seeking a declaration that any claim under the mortgage was time-barred since more than five years had passed since the bank accelerated the loan. Bartram essentially took the position that statute of limitations begins to run from the date of acceleration and expires five years from that date unless the mortgagee takes some act to decelerate the loan. And the mere voluntary dismissal of a foreclosure action does not, by itself, decelerate the loan. The Fifth DCA, relying heavily on the Florida Supreme Court’s decision in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004), held that the bank’s prior acceleration of the loan did not trigger the statute of limitations with respect to the accelerated payments. 140 So. 3d at 1010-11.
Florida’s appellate districts are currently split on this issue. The Fourth DCA takes the same view as Bartram. See Evergrene Partners, Inc. v. Citibank, N.A., 143 So. 3d 954 (Fla. 4th DCA 2014). The Third DCA, however, takes the opposite view. In Deutsche Bank Trust Co. Americas v. Beauvais, the Third DCA held that dismissal without prejudice of a foreclosure action in which a mortgagee sought to accelerate a loan does not function to decelerate the loan. That holding is significant because the statute of limitations continues to run on all payments accelerated (i.e., the entire loan amount), and the failure to bring suit within five years of acceleration will bar any subsequent suit unless the mortgagee has affirmatively decelerated the note. This conflict is concerning.
Recently, two federal courts have provided some insight into how the Florida Supreme Court may resolve the split among the districts. In Summerlin, the Southern District of Florida, acknowledging the split among the Florida appellate districts, observed, after a careful review of the case law, that the “vast majority of state and federal courts in Florida have found” that a “mortgagee’s prior exercise of its right to accelerate all payments and bring a foreclosure action will not begin the limitations period as to the entire mortgage.” 2015 WL 4065372, at *5. In fact, the Summerlin court noted that Beauvais is essentially the lone exception to that rule. Stern likewise concluded that Beauvais is “contrary to the overwhelming weight of authority.” 2015 WL 4065372, at *3. And Stern, like Summerlin, relied on the Fourth DCA’s decision in Evergrene Partners for the proposition that where a prior foreclosure action was dismissed without prejudice, “any acts of default still within the statute of limitations may be raised in a subsequent suit.” Id. (quoting Evergrene Partners, 143 So. 3d at 965). Of course, the decisions in Summerlin and Stern are not binding, but they are enlightening and do provide some guidance until the Florida Supreme Court decides Bartram sometime after oral argument in November.