Court: District Court of Appeal of Florida; December 6, 2016; Florida; State Appellate Court
Liberty Home Equity Solutions, Inc. appeals an order granting Patsy Raulston's motion for involuntary dismissal in a foreclosure case. Liberty contends that the trial court erred by dismissing the case after presenting sufficient evidence for a prima facie case of foreclosure and improperly weighing its evidence. In March 2009, Raulston entered into a home equity conversion loan with Liberty, which included a $286,500 advance against repayment with interest. Following Raulston's default on property taxes and insurance payments, Liberty sought HUD's approval to foreclose after notifying her of the default. HUD's response acknowledged the request but cited a lack of supporting documentation as a reason for pending status. Liberty subsequently filed a foreclosure complaint in January 2014, asserting default and HUD approval for acceleration. Raulston's defense claimed Liberty did not meet the conditions precedent, specifically the HUD approval. At trial, Liberty presented evidence of the loan agreement, default, and the HUD correspondence. After Liberty's case-in-chief, Raulston moved for involuntary dismissal, which the court granted, citing non-compliance with HUD rules and characterizing the default as technical. Liberty argues on appeal that it established a prima facie case, while Raulston maintains that Liberty failed to obtain necessary HUD approval. The appeal highlights the legal principle that a motion for involuntary dismissal in a non-jury trial is akin to a motion for directed verdict in a jury trial.
In Deutsche Bank Nat'l Tr. Co. v. Huber, the court established that the standard of review for a motion for involuntary dismissal is de novo, requiring the appellate court to view evidence favorably for the nonmoving party. A foreclosure plaintiff must prove a prima facie case by demonstrating: 1) an agreement between the parties, 2) the defendant's default, 3) acceleration of the debt, and 4) the amount due. This includes presenting the note, mortgage, an acceleration letter, and evidence of the outstanding debt. Additionally, if conditions precedent exist, the plaintiff must show compliance. The failure to fulfill a condition precedent typically leads to dismissal, but substantial compliance is sufficient in foreclosure cases. A breach does not invalidate the contract unless it causes prejudice.
In this case, Liberty successfully established a prima facie case by submitting necessary documents and evidence. Liberty provided a HUD letter indicating approval for debt acceleration and foreclosure, despite some ambiguity in the letter. The court inferred that the checked 'Request APPROVED' box indicated HUD's approval. Even if there was a conflict regarding the nature of the approval, it should be resolved in Liberty's favor. Consequently, the court reversed the involuntary dismissal and final judgment in favor of the appellee, also noting the trial court's error in determining that the appellee's failure to pay property taxes and insurance was not a material breach justifying foreclosure.
Borrower is obligated under the mortgage agreement to pay property charges, including taxes and insurance premiums, and must provide proof of such payments to Lender. The only exception to this obligation occurs if Lender decides to withhold funds from the Borrower's monthly payments or charge the payments to a line of credit as specified in the Loan Agreement. The trial court found that Lender could have addressed Borrower's default by utilizing the credit line, but it was not required to do so. Lender's witness indicated that Borrower had already exceeded her credit line, preventing the use of that option for tax and insurance payments. Consequently, the appellate court determined that the trial court incorrectly ruled Borrower's failure to pay these charges was not a material breach warranting foreclosure. The appellate court reversed the trial court's judgment in favor of Borrower and remanded the case for further proceedings.
