Continuing from my last post, this post (also excerpted/adapted from my CLE presentation o the Florida Bar Appellate Practice Section) outlines some unique legal issues that arise in foreclosure appeals.  

Attorney’s Fees

Particularly in residential mortgage cases, fee structures in foreclosure appeals can be different from other cases. On both sides of the aisle, flat fee arrangements are much more common than in other types of civil cases, and reduced hourly rate arrangements are also prevalent.

Successful clients also have the opportunity to collect fees from the opposing party. Most mortgages and loan documents include a prevailing party attorney’s fee provision, generally specifying only that the lender can recover its fees. But borrowers can recover their fees as well.

In Nudel v. Flagstar Bank, FSB, 60 So. 3d 1163 (Fla. 4th DCA 2011), the 4th District Court of Appeal held that under §57.105(7), such provisions in mortgages are deemed to provide for attorney’s fees to foreclosure defense counsel as well as plaintiffs’ counsel. And under §59.46, prevailing party fees are deemed to apply to appellate fees for the prevailing party on appeal. However, when cases are remanded for further proceedings (one of two possible results of a reversal, as will be discussed), appellate fees to appellants are generally awarded conditioned on ultimately prevailing in the litigation.

Whether charging a flat fee or hourly fee, lawyers need to be aware that they have the same obligation to justify the reasonableness of their fees. In Raza v. Deutsche Bank Nat’l Trust Co., 100 So. 3d 121 (Fla. 2d DCA 2012), the 2nd DCA cautioned that even when charging a flat fee, counsel cannot establish the reasonableness of its fees without satisfying the requirements of Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), to show a reasonable number of hours spent at reasonable rates.

Stays Pending Review

As mentioned earlier, we’ve seen many recent published opinions about many aspects of foreclosure litigation. One area where the DCAs have been very quiet, however, is regarding stays pending review in foreclosure cases. In fact, I’m not aware of any new precedent addressing stays pending review in the foreclosure context.

That is surprising. Chief among the concerns of many appellant foreclosure defendants is to retain their property pending the outcome of the appeal. The dearth in case law may be partly attributable to the fact that in many cases, plaintiffs will opt to postpone the sale until after the appeal is resolved, thereby avoiding the complications that can arise if the judgment is reversed after the property is sold to a third party, as well as the possibility that the cloud of the pendency of the appeal will drive down the amount potential buyers are willing to pay for the property. 

When the plaintiff chooses to go ahead with the sale while the appeal is pending, and the defendant seeks a stay, the only guidance comes from older cases addressing stays pending review in foreclosure cases.

Since a foreclosure judgment is not a judgment “solely for the payment of money,” a defendant cannot obtain an automatic stay by posting a bond for the amount of the judgment plus twice the statutory rate of interest under Rule 9.130(b)(1). As a practical matter, most foreclosure defendants would be unable to afford such a bond in any event.

So Rule 9.310(a) governs, making it discretionary with the court based on likelihood of success and likelihood of harm. Courts can also require a bond. But what is the appropriate amount of a bond?

According to the 3rd DCA in Fidelity & Deposit Co. v. Atlantic National Bank, 234 So. 2d 736, 738 (Fla. 3d DCA 1970), it’s not the difference between the market value of the property and the amount of the final judgment. So how should the amount be set?

The best indication may come from the 4th DCA’s decision in Cerrito v. Kovitch, 406 So. 2d 125, 127 (Fla. 4th DCA 1981), in which the court said it could not determine the propriety of the amount of the bond because:

No facts have been brought forward to this Court establishing the present fair market value of the property, the extent of other liens, if any, or waste or other damages which may be occasioned by delay. The trial court, on remand, will necessarily consider each of those factors and perhaps others in determining the amount of bond and conditions to be imposed.

That statement, too, is pretty vague, though. So the law remains unclear as to the appropriate amount of the bond.

Or perhaps it’s more accurate to say that it remains within the discretion of trial court judges. And there is considerable variation among trial judges. Some will grant a stay conditioned on posting a bond equal to what it costs to maintain the property for one year. Others will not grant a stay unless a bond is posted for the full amount of the judgment. Until a new published opinion is issued on this issue, expect the variance to persist. 


In the absence of a stay pending appeal, some foreclosure defendants who are appealing the final judgment file for bankruptcy to stop the public sale of their properties. (I wouldn’t deem to judge whether that is proper from a bankruptcy perspective, but it is certainly not uncommon.)

The question that is of interest to appellate lawyers is what effect does a debtor’s bankruptcy filing have on the defendant/debtor’s appeal? The answer, in Florida, depends on where the appeal is pending.

After the Bankruptcy Code was revised in the early 80s, the 3rd DCA was the first DCA to weigh in on the issue in Shop in the Grove, Ltd. v. Union Federal Savings & Loan Association of Miami, 425 So. 2d 1138 (Fla. 3d DCA 1982), and held that where the debtor is the appellant, proceeding with the appeal is not affected by the automatic stay of the bankruptcy code, and the appeal proceeds as if bankruptcy had not been filed. The 3rd DCA continues to adhere to Shop in the Grove today.

By contrast, the 1st DCA, in Taylor v. Barnett Bank, N.A., 737 So. 2d 1105, 1105 (Fla. 1st DCA 1998), the 2nd DCA, in Crowe Group, Inc. v. Garner, 691 So. 2d 1089 (Fla. 2d DCA 1993), and the 4th DCA, in Florida Eastern Development Co., Inc. of Hollywood v. Len-Hal Realty, Inc., 636 So. 2d 756 (Fla. 4th DCA 1994), have held that the automatic stay applies to the appeal even when the debtor is the appellant. The 4th DCA had initially adopted the view expressed in the 3rd DCA’s Shop in the Grove decision, but later reversed course based on developments in federal case law on the issue. I’m not aware of a published opinion from the 5th DCA on this issue.

Despite the 20+ year persistence of the intra-district conflict on this issue, the Florida Supreme Court has yet to weigh in to resolve it. So while a defendant’s bankruptcy filing may temporarily delay the public sale of the property, it does not substitute for a stay pending review, because no review can happen while the stay is in place. Except in the 3rd DCA. 

Effect of Reversal

Most stays pending review are obtained by agreement between the plaintiff and defendants. One reason foreclosure plaintiffs may agree to such stays is due to the consequences of the judgment being reversed after the property has been sold and title transferred.

If there is no stay, the sale takes place and the property is sold to a third party, and the judgment is subsequently reversed on appeal, what happens to the property? Here again, we do not have the benefit of a recent published opinion.

In 2013, the legislature enacted §702.036, under which if a final judgment of foreclosure is set aside, property that has been acquired from a third party cannot be returned to the borrower. There is a misconception that this statute resolved the issue by entitling third party buyers to retain the property if the final judgment is reversed.

But by its terms, the statute appears to apply only to requests to set aside a final judgment after “[a]ll applicable appeals periods have run as to the final judgment of foreclosure of the mortgage with no appeals having been taken or any appeals having been finally resolved,” i.e., when a Rule 1.540 motion to set aside a final judgment is brought, not when the judgment is reversed on direct appeal from the final judgment.

So the issue of whether a property purchased by a third party must be returned to the defendant upon reversal of the final judgment remains open. According to some old cases, it appears the property must be returned to the borrower. In a 1941 case, Bridier v. Burns, 4 So. 2d 853 (Fla. 1941), the Florida Supreme Court held that:

When a foreclosure sale is set aside by an order of court for any fatal irregularity, the title acquired by the purchaser is thereby vacated. The law subrogates the purchaser at the void foreclosure sale to all the rights of the mortgagee in the indebtedness and the mortgage securing the payment of the same.

The court further held that the purchaser should be reimbursed for improvements he/she/it may have made to the property in the interim.

In an even older case, Macfarlane v. Macfarland, 50 Fla. 570, 580-81, 39 So. 995, 998 (1905), the Florida Supreme Court held that any “rents and profits” the purchaser made from the property while it was in his/her/its possession should be offset against the amount to be repaid to the purchaser due to the property reverting to the borrower.

But other cases, such as Sundie v. Haren, 253 So. 2d 857, 859 (Fla. 1971), suggest that when a defendant’s property is purchased by a third party and the final judgment is reversed, the third party retains title to the property, with the defendant entitled to receive only monetary compensation. In the absence of recent precedent on this issue, the issue remains open for the time being.

[The following is excerpted/adapted from a Continuing Legal Education (CLE) presentation I gave earlier this year for the Florida Bar Appellate Practice Section’s Monthly CLE Teleconference. Because the lecture was too long for one post, I’m breaking it down into several posts.]

Foreclosure cases are not what many think of as being the sexiest cases. But I have come to enjoy them. A major reason for that is that it is an area in which the law is evolving: much new law has been made over the past few years, and continues to be made.

It is undeniable that as the appellate courts have grappled with the issues in foreclosure cases, the emerging landscape has profoundly affected the litigation of the body of foreclosure cases that still remain in the system. But I believe there will an even greater impact on non-foreclosure litigation, as appellate court decisions in foreclosure cases that have analyzed more generally applicable principles, such as contract law and evidence law, are applied in other types of civil litigation.

Given the quantity of foreclosure cases that have been filed since the foreclosure crisis began, it was inevitable that appellate courts would eventually be hit with an influx of foreclosure appeals. And we have seen that over the past few years.

By my calculations, Florida District Courts of Appeal published about four times as many reported opinions in foreclosure cases between 2010 and 2014 as they did between 2000 and 2004. And I’ve heard second-hand reports that in recent months, foreclosure appeals have accounted for as much as half of all new appeals filed in the DCAs.

The huge number of foreclosure appeeals is, in part, a natural result of there being so many foreclosure cases filed in trial courts. But it’s also because foreclosure cases are more likely to wind up on appeal than other cases, which are most often resolved before there is any trial or appeal.

Foreclosure cases are different. For one thing, at least when the defendants are represented by counsel, foreclosure cases are much more likely to go to trial than other civil cases. Despite court-directed mediation programs and federal incentives encouraging loan modifications, a relatively small number of foreclosure cases settle. 

Second, foreclosure cases are more likely to have appealable issues. The trial courts have been instructed to move cases through the system as quickly as possible to clear the backload of foreclosures out of the court system and off the real estate market. And we all know the expression “haste makes waste.”

Volume also plays a role. Judges have many cases to decide, large banks have a high volume of foreclosures to process, and lawyers on both sides typically are dealing with a large number of cases at once. So mistakes are almost inevitable.

Counsel for foreclosure plaintiffs initially tried to get to judgment more quickly through motions for final summary judgment. Foreclosure trial judges were willing to grant such motions. But in a series of decisions, the district courts reversed many final summary judgments. Most of those reversals were due to the fact that for a plaintiff to obtain summary judgment, it must conclusively refute all of the defendant’s affirmative defenses.

Affirmative defenses are, of course, hugely important in foreclosure cases. Technical defenses are among the primary weapons in foreclosure defendants’ arsenals, and litigation over them can be more complicated than over the plaintiff’s establishment of its cause of action. So at this point, it seems lawyers representing foreclosure plaintiffs have deemed it advisable to go to trial and leave it to the defendants to try to prove their affirmative defenses, rather than trying to carry the burden of disproving them at summary judgment.

That’s why most of the more recent opinions coming out of the DCAs deal with judgments entered after trial. Due to the number of judgments after bench trial being reviewed and the centrality of technical defenses and arguments to foreclosure litigation, what seems like whole new bodies of case law have emerged from foreclosure appeals. More on the emerging case law in my next post.   

Florida’s Third District Court of Appeals had harsh words for a foreclosing bank’s counsel in Jade Winds Association v. Citibank, N.A., No. 3D11-275, released on Wednesday, May 4, 2011.

The 3rd DCA not only reversed an order that had cancelled a foreclosure sale at the bank’s request, but called out the bank’s counsel for making “misleading” statements to the trial court, reminding the trial court that it was “free to impose appropriate sanctions” against the bank and/or its counsel on remand.

Basic Facts:

As the case’s name indicates, Jade Winds involved a three-party dispute between a homeowner/borrower, a mortgagor bank, and a condominium association, with the latter two both filing claims for alleged defaulted payments from the homeowner. The condo association obtained a default judgment and took title to the property, then asked for, and received, summary judgment granting the bank’s claim to the property and a date for a foreclosure sale.

On the day the foreclosure sale was to occur, the bank filed an emergency motion to cancel it, supposedly to consider a loan modification for the homeowner. The problem was that the borrower’s mortgage loan couldn’t possibly be modified because the condo association had taken title from the borrower more than a year earlier. To make matters worse, the bank didn’t serve notice of its motion to cancel the sale on the condo association, the actual title holder of the property.

The Holding:

The 3rd DCA was not pleased. Per Jeffrey Kuntz of The Florida Legal Blog

The motion to cancel the January 2011 sale was considered, ex parte, and granted due to “affidavit review.” The Third District stated:

In the instant case, without rehashing the facts set forth in this opinion, it is clear that Citibank failed to properly serve Jade Winds’ counsel with the Second Motion to Cancel and failed to notify counsel of the hearing. We recognize that the Second Motion to Cancel was filed on an “emergency” basis, but note that Citibank apparently made no attempt to notify Jade Winds’ counsel of the motion by either delivery, facsimile, email, or phone call, although Jade Winds’ counsel actively participated in this litigation. Further, based on Judge Langer’s previous order imposing sanctions against Citibank, Citibank knew that its actions were inappropriate. As Judge Langer simply found, Citibank’s “conduct was in direct violation of [Jade Winds’] due process rights” and the Order Canceling Sale was “void for lack of notice.”

The Court then referred Citibank’s counsel to the applicable Miami-Dade administrative order (10-E), In re Amendments to the Florida Rules of Civil Procedure, 44 So. 3d 555, 557-58 (Fla. 2010), and reversed the order canceling the foreclosure sale with instructions to consider whether sanctions should be imposed.

Robyn A. Friedman has additional coverage of the decision in the Daily Business Review (subscription required).  Suffice it to say, the 3rd DCA made it clear that trial courts should not cancel foreclosure sales without giving all interested parties a fair opportunity to appear and be heard, and without an evidentiary record backing up counsel’s assertions.  

Part of a Trend in Florida District Courts?

While interesting in itself, Jade Wind becomes all the more significant when considering recent decisions of the 4th DCA.  Indeed, there appears to be something of a trend emerging in the District Courts of Appeal — they are now cracking down on some of the informal practices/skirting of the rules of procedure (depending on which side you’re on) that aren’t generally tolerated in other litigation, but until now had been frequently overlooked in foreclosure cases.

The 3rd DCA’s strong disapproval of the lack of notice and evidentiary void in Jade Wind dovetails with the 4th DCA’s expression of distaste for similar practices in Arsali v. Deutsche Bank National Trust Company, No. 4D10-3830, just a month earlier.

In Arsali, the trial court granted a motion to cancel the sale retroactively rather than on the day of the sale. Like the trial court in Trade Winds, the trial court overlooked a bank’s failure to put on evidence in support of its motion – and the lack of notice to interested parties.

The bank in Arsali actually filed a motion to cancel the foreclosure sale 2 weeks in advance, but it was never ruled on. Still, the bank didn’t show up for the sale.

The property, which the bank had appraised for $185,000+ (the bank’s judgment against the mortgagee was for $350,000+), was sold to a third party for just $16,100. Needless to say, the bank was not pleased, and filed an emergency motion to rescind the sale.

It submitted no affidavits or other evidence in support. And it didn’t serve the motion on the third party buyer, and didn’t serve the buyer with notice of the UMC hearing it set for the motion. The trial court heard motion and cancelled the sale.

The 4th DCA strongly disagreed with that course of action. Despite using a standard of review allowing reversal “only when the trial court has grossly abused its discretion,” the 4th DCA reversed, “conclud[ing] that the trial court abused its discretion in summarily granting the motion without holding an evidentiary hearing.”

 The 4th DCA’s opinion doesn’t mention sanctions. But its judgment itself amounted to something of a sanction. By reversing the order vacating the sale, the court allowed the purchase to stand – for just 11% of what the bank hoped to recover through foreclosure.

The Florida Supreme Court is About to Join the Fray

Then there’s the 4th DCA’s decision, En Banc, to certify to the Florida Supreme Court a “question of great public importance” (for jurisdiction-conferring purposes under Rule 9.030 of the Florida Rules of Appellate Procedure) in Pino v. Bank of New York Mellon.

The certified issue in that case is whether a bank that voluntarily dismissed a foreclosure case to avoid being sanctioned for alleged fraud in documenting its right to foreclose can be prohibited from pursuing foreclosure by filing a second case. As is common with certified questions of great public importance, the Florida Supreme Court recently accepted jurisdiction over Pino.  So more changes may be on the way.