Imagine a bank that can lose a foreclosure suit, file it again, lose it again, file it again, and so on—with virtually no limits whatsoever as to the number of times they can file or the time they have to accomplish it.
In a surprising ruling, the Fifth District Court of Appeal effectively stripped away one of the last limits to prevent that from happening: U.S. Bank v. Bartram [PDF].
Bartram had won an order before the trial court, which ruled that the bank had lost its chance to foreclose on the Bartram home, when it filed a prior foreclosure suit in 2006, that case got dismissed in 2011, and the bank did nothing to seek rehearing or appeal of that order. Ina second lawsuit, Bartram claimed the bank’s right to enforce was barred by the statute of limitations stated in Florida Statutes, § 95.11 (2) (c), which imposes a five-year limit on any lawsuit to foreclose a mortgage.
The bank argued that the dismissal of the prior case effectively reset the clock for the bank to file a new lawsuit. In other words, losing its first case gave the bank another five years to file a new suit, dismissal of that new lawsuit would give the bank another five years, and so on. At a time when the sheer volume of foreclosure cases has been deemed a crisis by the legislature and the court system, the unlimited re-filing of old, already-dismissed foreclosure cases would only add to that burden. But accordingly to the Fifth DCA, “there is no reason” why the mere passage of time, or having lost its first (or second, or third) attempt to foreclosure should present any obstacle to the bank tossing a brand-new foreclosure suit on the pile. It ruled that:
a foreclosure action for default in payments occurring after the order of dismissal in the first foreclosure action is not barred by the statute of limitations found in section 95.11(2)(c)…
This effectively removes all limits on the filing of a new foreclosure action, no matter how many times the case has been previously dismissed.
The certified question
The appellate court did recognize the matter is one “of great importance” and therefore certified it to the Florida Supreme Court for further review. This means that the parties may seek further review in the Florida Supreme Court, which could agree with the Fifth District’s opinion, toss it out completely, or find some middle ground somewhere in between. As of this date, the deadline has not run for the parties to seek further review or clarification and neither party has yet filed the necessary papers to do so.
How Bartram affects homeowners
This decision has a critical impact for homeowners who have had prior foreclosures dismissed, and though they were safely beyond the five-year mark. This new decision means the bank does get to refile, and homeowner who previously though they were safe may not be. However, initial analysis shows the opinion is limited to the application of one particular subsection of the statutes, and others exist that may offer relief. Furthermore, there is language in the opinion indicating even though the bank can file a new foreclosure suit, it may not seek to recover any individual payment that is more than five years overdue. This will present significant challenges for bank who will need to figure out what they can sue for, and how to get it. This makes it all the more important, for those facing this situation, to consult with a foreclosure attorney familiar with the statute of limitations and how it operates.
For those who like to read, the briefs are available here as PDFs. Take note of the arguments by Bartram and the Homeowner’s Association that were completely ignored in the opinion, and ask yourself why the court ignored those arguments.