The interesting case of the day comes to us from the 4th District Court of Appeals (4th DCA). The 4th DCA covers Broward, Palm Beach, Martin, St. Lucie, Indian River, and Okeechobee Counties. Its opinions on the issue of standing, like today’s case, often influence the decisions of the four other District Courts in Florida.
Harris v. HSBC Bank USA is about standing. Standing is a legal concept that ensures a plaintiff has a sufficient interest in the case prior to the filing of the law suit. In recent months, the 4th DCA has been particularly aggressive in reversing mortgage foreclosure judgments because the banks cannot prove that they had standing to file the law suit.
In Harris, HSBC brought a mortgage foreclosure case against Harris. When filing a mortgage foreclosure complaint, the bank, here HSBC, is required to attach the promissory note, endorsements on that note, and any assignments of the note and mortgage. Notes are often endorsed between banks, mortgage trusts, and insurers like Fannie Mae much the same way a check is endorsed. HSBC’s note originally contained no endorsements, and its assignment was “backdated” to have an “effective date” that was prior to the law suit. Before trial, HSBC filed an amended complaint that included a note with an undated blank endorsement. At trial, the bank’s witness could not explain when the blank endorsement made it onto the note nor why the assignment of the note was executed after the suit was filed. The trial court, nonetheless, entered judgment in favor of HSBC. On appeal, the 4th DCA held that since HSBC had no evidence that supported its attempts to “backdate” the assignment nor any evidence of when the blank endorsement made it onto the note, HSBC failed to prove standing. The Court effectively dismissed the case. The opinion can be found here:
You may ask yourself why this case is important for community associations like yours. You are not alone in wondering. The reason cases like these are important is that community associations have a stake in the mortgage foreclosure case as well. Generally, associations are named as defendants. Every case has its own unique facts, which leads to case by case decisions on what to challenge and how to challenge it. Standing is not always controversial – some banks actually do what they are supposed to do. Where it fits, however, challenging standing is a viable legal strategy that could create a path to greater assessment recovery for the Association.