Florida Appellate Court Hears Argument on Fraudulent Mortgage Documents

(From Daily Business Review)

Can homeowners reopen cases?

Adolfo Pesquera


Pressing for a Lake Worth homeowner’s right to expose alleged fraud by a bank, a foreclosure defense attorney argued before a state appeals court that Bank of New York Mellon cannot stop a trial judge from reopening a case that had been dismissed.

Oral arguments heard Wednesday looked at the cause of the bank’s voluntary dismissal of Roman Pino’s foreclosure case last year. Defense attorneys alleged a fraudulent assignment of mortgage was submitted to the Palm Beach Circuit Court by the Law Offices of David J. Stern in Plantation. After becoming suspicious of the paperwork, the defense scheduled depositions of the law firm’s employees.

On the eve of the scheduled depositions, the bank dropped the case, and no depositions took place. But five months later, the bank refiled its case against Pino.

Enrique Nieves III, an attorney with Ice Legal in Royal Palm Beach, told the 4th District Court of Appeal panel that the second lawsuit filed by the bank did not contain the questionable document originally submitted to show that the bank was the rightful lien holder.

Stern’s law firm is one of four under investigation by the Florida attorney general’s office, which issued subpoenas in search of improper documentation that may have been used to accelerate foreclosures in court.

Law firms defending homeowners have alleged lenders’ foreclosure lawyers have used a number of deceptions, including use of fraudulent assignments of mortgage, improper affidavits of indebtedness and so-called robo-signing, or rapid-fire signing of documents attesting to the accuracy of documents they never read.

‘The Grand Scheme’

In August 2009, Pino’s attorney asked Palm Beach Circuit Judge Meenu Sasser to strike the bank’s dismissal motion in the first case and conduct an evidentiary hearing to expose the alleged fraud. Sasser said she could not reopen a case that was voluntarily dismissed. Nieves appealed the judge’s ruling to the DCA.

In arguments before the appellate panel last week, BNY Mellon attorney Katherine Giddings with Akerman Senterfitt in Tallahassee denied any fraud took place. She asserted the homeowner must show fraud was central to the case in order to reopen it.

Moreover, she argued the homeowner had no right to reopen the first case because the bank did not benefit from the dismissal. Giddings indicated the only benefits anyone derived from the March 2009 dismissal were attorney fees paid to Ice Legal for prevailing and the reprieve Pino received to remain in the home.

“I’m urging you to consider this case in the grand scheme of things,” Giddings said. “If you allow courts to go back and open up all of these cases when it’s clear there was no affirmative relief [to the banks], then you’re going to create chaos.”

Judge Gary Farmer asked if Giddings was suggesting fraud was widespread.

“I’m not acknowledging that any fraud occurred,” she said.

“As a court system, why would we shrink, no matter how many cases it might involve, from looking out for attempts to defraud courts?” Farmer asked. “Why wouldn’t we be most vigilant?”

Right To Dismiss

Nieves argued that a key issue in favor of reversal at the trial court level was Judge Sasser’s reliance on case law that did not address a potential fraud upon the court. He cited a land dispute case that was reinstated to examine fraudulent documents.

In Pino’s foreclosure case, he said, “They’re basically using the [voluntary dismissal] rule to aid and abet their coverup.”

After the hearing, Nieves told the Daily Business Review that other judges have relied on Judge Sasser’s decision to avoid reopening cases where fraud may have occurred. Should the appellate court reverse and remand, the potential for reopening cases would be substantial.

Without attempting a rigorous search, Nieves said he found 21 cases like Pino’s where he claimed notary stamps were used to fraudulently back date an unrecorded assignment of mortgage.

Throughout Giddings’ arguments, the appellate judges interrupted her on a variety of issues.

When she asserted the bank got no relief by its voluntary dismissal, Judge Mark Polen said: “Your client did get relief. They didn’t have to submit to depositions.”

When she characterized the central issue as an absolute right to voluntarily dismiss, Polen said, “The issue as I see it is whether a court on subsequent information can strike that dismissal.”

Giddings insisted trial courts already had enough discretion without resorting to striking voluntary dismissals. Judges could sanction lawyers or report them to The Florida Bar.

On that point Judge Martha Warner said: “You talked about other sanctions. But if you don’t open it up, how can you sanction them in the second case for what’s happened?”

The appellate did not immediately rule on the homeowner’s appeal.