Opinion
Case No. 14-20759-CIV-WILLIAMS
07-28-2014
EDUARDO E. TORRES, Plaintiff, v. COUNTRYWIDE HOME LOANS, INC., et al., Defendants.
ORDER GRANTING MOTION TO DISMISS
THIS MATTER is before the Court on Defendants Countrywide Home Loans, Inc. ("Countrywide"), Mortgage Electronic Registration Systems, Inc. ("MERS"), Federal National Mortgage Association ("FNMA"), and Bank of America, N.A.'s ("BANA") Motion to Dismiss (DE 6) and Defendant Parc Vista Condominium Association, Inc.'s ("Parc Vista") Motion to Dismiss (DE 13). For the reasons set forth below, the Motions to Dismiss are GRANTED.
I. BACKGROUND
On January 2, 2014, Plaintiff Eduardo E. Torres, individually and on behalf of a class of persons similarly situated, filed a three-count complaint against Defendants in Miami-Dade County Court (DE 8-1). On February 28, 2014, Defendants removed the Complaint to this Court. For the purposes of Defendants' motion only, the Court assumes the following allegations to be true. On May 26, 2004, Plaintiff, along with his wife Ivonne Torres, and another woman named Hortensia Torres (collectively, "Borrowers") obtained a $123,900 mortgage for Unit No. 13929 in Building 24 of Parc Vista, a Condominium, located at 13929 SW 91 Terrace, Miami, FL 33186 (DE 8-1 at 2, ¶ 1; DE 8-1 at 25). The Borrowers also share title to the property (DE 8-1 at 3, ¶ 3).
The Borrowers agreed that the note and mortgage would be paid by June 1, 2034 (DE 8-1 at 12, ¶ 32). The note and mortgage contain an optional acceleration clause, which if the holder of the mortgage exercised, would accelerate the remaining sums Plaintiff owed to an earlier date (DE 8-1 at 12, ¶ 33). Plaintiff allegedly defaulted on his mortgage payments on July 1, 2008 (DE 8-1 at 13, ¶ 37) and Countrywide exercised its rights under the acceleration clause and declared all amounts due and owning as of July 1, 2008 (DE 8-1 at 13, ¶ 38). On March 13, 2009, Countrywide filed a foreclosure action against Borrowers which was subsequently dismissed by the court on or about May 30, 2012 (DE 8-1 at 13, ¶ 40; DE 8-1 at 38-41).
In this action, Plaintiff advances three counts: (1) Plaintiff seeks a declaration that the statute of limitations for enforcing the note has expired; (2) Plaintiff seeks a declaration that the statute of limitations for foreclosing on the mortgage has expired; and (3) quiet title (DE 8-1 at 13-20). Plaintiff purports to represent a class of more than 50,000 individuals (DE 8-1 at 8, ¶ 25) consisting of persons who are (1) borrowers or mortgagors who entered into a note and mortgage with one of the Defendants; (2) for a property located in the state of Florida (3) whose note or mortgage was accelerated by the Defendants; and (4) against whom no action was filed within the five year statutory period pursuant to Fla. Stat. § 95.11(2)(b), or against whom an action was filed after the five year period had expired (DE 8-1 at 8-9, ¶ 26).
Defendants have moved to dismiss the Complaint on the grounds that Plaintiff has failed to state a claim and on the grounds that Plaintiff lacks standing to pursue his claims. Defendants also argue that the Complaint should be dismissed for failure to join necessary parties pursuant to Rule 19. Plaintiff did not file a response to the motions to dismiss.
II. THE REMOVAL
As an initial matter, the Court addresses Defendants' removal of this action and concludes that removal was proper under the Class Action Fairness Act ("CAFA"). Plaintiff has not moved to remand and the time to do so has passed. Nonetheless, federal courts are courts of limited jurisdiction and are "obligated to inquire into subject-matter jurisdiction sua sponte whenever it may be lacking." Blakenship v. Gulf Power Co., 551 F. App'x. 468, 470 (11th Cir. 2013) (quoting Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir. 2005)).
A defendant may remove a case to federal court under CAFA if the following requirements are met: (1) the action removed is a civil action filed under a state statute or rule of judicial procedure authorizing an action to be brought by one or more representative persons as a class action; (2) there are at least 100 members of the proposed class; (3) at least one member of the class is a citizen of a state different from that of at least one of the defendants; (4) the matter in controversy alleged in the complaint exceeds $5,000,000 exclusive of costs and interest; and (5) the removal is timely. See 28 U.S.C. §§ 1332(d), 1441, 1446, 1453.
It appears that Parc Vista's consent was not sought prior to removal. However, because this action was removed under CAFA, Parc Vista's consent is not required. See 28 U.S.C. 1453(b).
Here, all five requirements are met. First, Plaintiff filed the Complaint pursuant to Rule 1.220 of the Florida Rules of Civil Procedure which authorizes class actions (DE 8-1 at 6, ¶ 16). Second, the proposed class consists of more than 100 members (DE 8-1 at 8, ¶ 25 ["The approximate number in each class is in excess of 50,000 individuals."]). Third, Plaintiff is a citizen of Florida (DE 8-1 at 3, ¶ 4) and MERS is a citizen of Virginia. Fourth, the matter in controversy alleged in the complaint exceeds $5,000,000. If the jurisdictional amount in controversy is not facially apparent from the complaint, the removing defendant may make factual allegations supported with evidence, such as affidavits, declarations, or other documentation to establish jurisdiction. See Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir. 2010). The removing defendant bears the burden of proving the amount in controversy by a preponderance of the evidence and the Court is permitted to draw reasonable deductions, inferences, or extrapolations in determining whether the amount in controversy has been satisfied. Id. at 752-54.
Plaintiff's mortgage was for $123, 900 (DE 8-1 at 25) and Plaintiff has alleged that the amount in controversy in this action exceeds $15,000 (DE 8-1 at 3, ¶ 2). Plaintiff also states that he is alleged to have defaulted on his mortgage and note (DE 8-1 at 13, ¶ 37) and that Countrywide alleges he owes at least $116,687.61 (DE 8-1 at 13, ¶ 28; DE 8-1 at 39, ¶ 7). Plaintiff also states that his claims are typical of the claims of all class members (DE 8-1 at 7, ¶ 21). As Defendants argue, if every member of the proposed class has a claim worth the same amount as Plaintiff's, the amount in controversy is easily satisfied (see DE 6 at ¶¶ 14-17). Likewise, if every member of the class other than Plaintiff had a claim worth 99% less than Plaintiff's claim, the amount in controversy would still be well in excess of the $5,000,000 requirement. Accordingly, the Court concludes that the amount in controversy exceeds $5,000,000. Finally, the removal of this action was timely.
In that instance, the other 49,999 class members would each have a claim of approximately $1,166.87, bringing the total amount in controversy to approximately $58,342,333.13 in addition to Plaintiff's claim. Defendants also submitted an affidavit in support of the removal notice in which Katherine Cacho, Vice President, Senior Operations Manager in Bank of America's Mortgage Resolution Team, states that the total number of all loans serviced by Bank of America in Florida with a principal balance of less than $250 is 3,080. While the Defendants provide no information about the total number of loans serviced by Bank of America in Florida, the Court need not "suspend reality or shelve common sense in determining whether the face of a complaint, or other document, establishes the jurisdictional amount." Pretka, 608 F.3d at 770. Even if every class member other than Plaintiff had a claim of $100, the jurisdictionally-required amount in controversy would still be satisfied.
Defendants removed this action February 28, 2014. Defendants Countrywide and MERS were served on January 31, 2014. --------
CAFA contains a "local controversy exception" pursuant to which the district court "shall decline to exercise jurisdiction" if, among other requirements, two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the state in which the action was originally filed. See Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 (11th Cir. 2006); see also 28 U.S.C. § 1332(d)(4). Under CAFA, once jurisdiction is otherwise established, the plaintiff bears the burden of proving the local controversy exception applies. Evans, 499 F.3d at 1164. Plaintiff has not moved to remand and the Complaint states only that the class is comprised of both Florida residents and residents of other states. Accordingly, the Court concludes that this action was properly removed.
III. LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead sufficient facts to state a claim that is "plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court's consideration is limited to the allegations in the complaint. See GSW, Inc. v. Long Cnty., 999 F.2d 1508, 1510 (11th Cir. 1993). All factual allegations are accepted as true and all reasonable inferences are drawn in the plaintiff's favor. See Speaker v. U.S. Dep't. of Health & Human Servs. Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010); see also Roberts v. Fla. Power & Light Co., 146 F.3d 1305, 1307 (11th Cir. 1998). Although a plaintiff need not provide "detailed factual allegations," a plaintiff's complaint must provide "more than labels and conclusions." Twombly, 550 U.S. at 555 (internal citations and quotations omitted). "[A] formulaic recitation of the elements of a cause of action will not do." Id. Rule 12(b)(6) does not allow dismissal of a complaint because the court anticipates "actual proof of those facts is improbable," but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Watts v. Fla. Int'l Univ., 495 F.3d 1289 (11th Cir. 2007) (quoting Twombly, 550 U.S. at 545).
IV. THE STATUTE OF LIMITATIONS FOR ENFORCING THE NOTE AND FORECLOSING ON THE MORTAGE HAS NOT EXPIRED
In Counts 1 and 2, Plaintiff seeks a declaration that the statute of limitations for enforcing the note and foreclosing on the mortgage has expired (DE 8-1 at 13-18). Plaintiff argues that the five year statute of limitations period for enforcing the note and foreclosing on the mortgage began to run when the Defendants exercised the optional acceleration clause on July 1, 2008 (DE 8-1, ¶¶ 50, 60). Accordingly, Plaintiff argues that the statute of limitation for enforcing the note or foreclosing on the mortgage expired on July 1, 2013 (DE 8-1, ¶¶ 51, 61).
Ordinarily, when a party exercises its right to accelerate the amount owed on a promissory note, as Defendants did here, the statute of limitations begins running for that party to bring a claim to enforce the note. See Greene v. Bursey, 733 So. 2d 1111, 1114-15 (Fla. 4th DCA 1999) ("Where the installment contract contains an optional acceleration clause, the statute of limitations may commence running earlier on payments not yet due if the holder exercises his right to accelerate the total debt because of a default."). However, this rule does not apply when the note is secured by a mortgage on the subject property and the party exercising the right to accelerate brings a cause of action to enforce the note or foreclose on the mortgage which is dismissed for any reason. See Romero v. SunTrust Mortg. Inc., No. 1:13-cv-24491, 2014 WL 1623703 at *3 (S.D. Fla. Apr. 22, 2014); see also Olympia Mortg. Corp. v. Pugh, 774 So.2d 863, 865 (Fla. 4th DCA 2000) ("By voluntarily dismissing the suit, [the mortgage company] in effect decided not to accelerate payment on the note and mortgage at that time."); U.S. Bank Nat'l Ass'n v. Bartram, No. 5D12-3823, 2014 WL 1632138 (Fla. 5th DCA Apr. 25, 2014) (despite involuntary dismissal of foreclosure action, statute of limitations did not bar enforcement of mortgage and note).
This is because "while a foreclosure action with an acceleration of the debt may bar a subsequent foreclosure action based on the same event of default, it does not bar subsequent actions and acceleration based on different events of default." See e.g., Evergrene Partners, Inc. v. Citibank, N.A., No. 4D13-2236, 2014 WL 2862392 at *2 (Fla. 4th DCA June 25, 2014) (citing Singleton v. Greymar Assocs., 882 So.2d 1004, 1008 (Fla. 2004)). In such instances, the statute of limitations has not run on all of the payments due pursuant to the note, and the mortgage is still enforceable based upon subsequent instances of default. Id.; see also Bartram, 2014 WL 1632138 at *6 ("[A] default occurring after a failed foreclosure attempt creates a new cause of action for statute of limitations purposes, even where acceleration had been triggered and the first case was dismissed on its merits."); PNC Bank, N.A. v. Neal, No. 1D12-2544, 2013 WL 5779048 at *1, (Fla. 1st DCA Oct. 25, 2013) ("We affirm, but point out that the dismissal with prejudice of PNC Bank's foreclosure action against the Neals does not preclude PNC Bank from instituting a new foreclosure action based on a different act or a new date of default . . "). To find otherwise would disincentivize the mortgagor from making future timely payments on the note. Singleton, 882 So.2d at 1007-08 (stating that "justice would not be served if the mortgagee was barred from challenging the subsequent default payment solely because he failed to prove the earlier alleged default.").
Here, the optional acceleration clause was exercised on July 1, 2008 and Countrywide filed a foreclosure action against Plaintiff on March 13, 2009, which was subsequently dismissed on May 30, 2012. While any claims relating to individual payment defaults that are more than five years old may be subject to the statute of limitations, each payment default that is less than five years old creates a basis for a subsequent foreclosure or acceleration action. See Kaan v. Wells Fargo Bank, N.A., 981 F. Supp. 2d 1271, 1274 (S.D. Fla. 2013); Romero, 2014 WL 1623703 at *4. Accordingly, the note and mortgage remain valid and enforceable and Plaintiff has failed to state a claim upon which relief may be granted.
V. PLAINTIFF HAS FAILED TO STATE A CLAIM TO QUIET TITLE
In Count 3, Plaintiff brings a claim for quiet title (DE 8-1, at 17-18). Under Florida law, in order to state a claim for quiet title, a plaintiff must allege the following three elements: (1) that he has title to the subject property; (2) that there is a cloud on the title; and (3) that the cloud is invalid. See Sliptchuik v. ING Bank, No. 6:13-cv-460-Orl-28GJK, 2013 WL 4596951 at *2, (M.D. Fla. Aug. 28, 2013) (citing Stark v. Frayer, 67 So.2d 237, 239 (Fla. 1953)). In addition, "[n]ot only must the matter which constitutes the alleged cloud be shown, but facts must be alleged which give the claim apparent validity as well as those which show its invalidity." Kaan, 981 F. Supp. 2d at 1273 (quoting Stark, 67 So.2d at 239).
As explained above, the note and mortgage remain valid and enforceable. Accordingly, they do not, as a matter of law, constitute a cloud on Plaintiff's property supporting a quiet title claim. See id. at 1274 (holding that while any claims relating to individual payment defaults that are more than five years old may be subject to the statute of limitations, the "note and mortgage remain a valid and enforceable lien against Plaintiff's property, and do not, as a matter of law, constitute a cloud on Plaintiff's property supporting a quiet title claim."); Poole v. Aurora Loan Services, LLC, No. 8:13-cv-2548-T-35-TBM, 2014 WL 3378344 at *5 (M.D. Fla. June 30, 2014) (finding that while defendants may have been barred from seeking foreclosure on defaults more than five years old, they were not barred from seeking foreclosure on more recent defaults and therefore the mortgage was still valid and enforceable and could not create a cloud on the title). Because the note and mortgage remain valid and enforceable, they cannot constitute a cloud on Plaintiff's property and Plaintiff has failed to state a claim upon which relief may be granted.
VI. CONCLUSION
Accordingly, for the reasons set forth above, it is hereby ORDERED AND ADJUDED that Defendants' Motions to Dismiss (DE 6, 13) are GRANTED. The Plaintiff's Complaint is DISMISSED. The Clerk is directed to CLOSE this case for administrative purposes. DONE AND ORDERED in Chambers at Miami, Florida this 28th day of July, 2014.
/s/_________
KATHLEEN M. WILLIAMS
UNITED STATES DISTRICT JUDGE