Friday, February 18, 2011

Association Awarded Sanctions Against Mortgage Holder and its Counsel

In a recent appellate decision, an Association was awarded sanctions against a mortgage holder and its counsel as a result of wrongfully naming the Association in the mortgage foreclosure action.

In March 2009, Wells Fargo filed a mortgage foreclosure action wrongfully naming the South Bay Lakes Homeowners Association as a party. The Association filed an answer asserting that Wells Fargo lacked standing to bring the action. The Association asserted that there was confusion associated with the legal description contained within the documents filed with the Court. The Association also served a Request for Admission asking the bank to admit that it did not have standing to bring the action inasmuch that the bank had no evidence to substantiate that it was the equitable owner of the note and mortgage in question. Wells Fargo failed to file an Answer to the Request for Admission.

In May 2009, the Association filed a motion for summary judgment with an affidavit explaining that an assignment of the mortgage had not been recorded in the public records. The Association further asserted that the legal description set forth on the Lis Pendens was not a property located within the Association. The Association also served a Motion for Attorney's Fees pursuant to Florida Statutes, Section 57.105 which required the bank to resolve the matter within a twenty-one day time period. Again, the bank took no action.

On July 29, 2009, the attorney for the Association attended the hearing on its Motion for Summary Judgment. Wells Fargo made no appearance. Based on the admissions and the affidavit, the trial court entered a Final Judgment dismissing the entire action without leave to amend.

Thereafter, the Association filed its Motion for Attorney's Fees and scheduled a hearing for November 2009. Wells Fargo sent a local attorney who had not reviewed the file to the hearing. He had "no idea" whether the legal description in the bank's complaint had been inaccurate.

In this case it was undisputed that Wells Fargo filed a foreclosure action without an assignment or other legal basis on which to file the action and that neither the bank nor its attorneys took any steps to confirm that Wells Fargo had the legal right to file the action. At oral argument, the bank's attorney tried to justifu the improper filing as being the result of the vast volume of foreclosure cases in the judicial system.

That argument was summarily rejected by the Court.

This very timely and significant case for associations is South Bay Lakes Homeowners Association, Inc. v. Wells Fargo Bank, N.A., 36 FLW D389 (2nd DCA).

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

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