[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.   

People make mistakes. Even lawyers. Even judges. We are all human after all, and to be human is to be fallible. In the pressure-packed environment of a trial or hearing, the probability that a mistake will be made is even greater.

Part of the job of an appellate lawyer is to comb through the record of what happened in the trial court, and with the benefit of a fresh perspective, find the errors, and explain to the appellate court what errors the trial judge made. But that is not the end of the story. Not even close. If it was, one would expect every appeal to result in reversal. The reality is otherwise.

Why? There are a host of reasons–ranging from the failure of the side that lost to preserve the issue (by making the argument to the trial judge) to the deference given to the trial judge in making certain decisions that he or she is in a better position to make–and there isn’t nearly enough space here to get into all of them.

The Harmless Error Doctrine

One of the most significant factors–at least when the decision being appealed was reached after a full-blown trial–is the doctrine of harmless error. It has been the subject of recent debate, and the Supreme Court of Florida is poised to set down the definitive word on the issue some time after it resumes its opinion cycle after the summer hiatus.

Harmless error, in a nutshell, is the idea that sometimes a trial judge’s ruling, even though incorrect, was too insignificant in the context of all of the trial evidence the jury saw to have impacted their decision. The doctrine exists because the law recognizes that trials are a tremendous ordeal and after so much effort by the parties, the trial judge, and the jury members, the results should not lightly be tossed aside.

After the two sides and the judge have spent so much time preparing for and conducting the trial, and the members of the jury have sacrificed their time to listen and deliberate and reach a decision, appellate courts are understandably hesitant to undo the result. On the other hand, the law is the law, and litigants have the right and expectation that the law will be applied correctly in their cases, whether or not that may cause inconvenience.

“Harmless error” is where appellate courts draw the line. In Florida, there is actually a statute that prohibits courts from reversing unless “in the opinion of the court to which application is made, after an examination of the entire case it shall appear that the error complained of has resulted in a miscarriage of justice.”

Drawing Lines 

But it is a lot easier to say that an error will not result in reversal when it is harmless than it is to figure out when an error was, in fact, harmless. How does the court know whether there has been “a miscarriage of justice”? Judges do not have the option of calling the jurors and asking them whether their decision would have been different if they had not heard testimony they should not have been allowed to hear, or if they had seen evidence they should have been allowed to see.

So appellate courts have created tests to be used as a substitute. Most recently, the Fourth District Court of Appeal of Florida (4th DCA), sitting en banc, wrestled with what test to use in its late 2011 decision in Special v. Baux, 79 So. 3d 755 (Fla. 4th DCA 2011) (en banc).

The court began by observing that prior decisions of the Supreme Court of Florida and District Courts of Appeal of Florida reflect two ways of looking at whether there was a “miscarriage of justice.”

One approach asks whether the result would have been the same if the error had not been made. That is, looking at all of the evidence, if the jury had seen what it was supposed to see, would it have reached the same decision anyway? If so, the error is harmless. If not, a new trial is required. The 4th DCA called this test a results-oriented approach.

The second approach looked at whether the error had “an adverse effect upon the jury’s verdict.” In other words it asks whether the error “contributed to the verdict.” Was the wrongfully admitted or excluded evidence something that played a part in the jury’s decision? The 4th DCA called this approach an “effect on the fact-finder” test.

Prior 4th DCA decisions had used the results-oriented approach, and every other District Court of Appeal had also adopted some variation of the results-oriented test. Nonetheless, in Special, the 4th DCA declared that approach to be inconsistent with Florida Supreme Court precedent, and that it improperly requires the appellate court to weigh the evidence, which is not the role of an appellate court.

In its place, the Fourth DCA became the first Florida District Court of Appeal to expressly adopt the “effect on the fact-finder approach.” The rule in civil cases, it said, should be that an error is harmless only if it is more likely than not that the error did not contribute to the verdict.

Are There Really Two Approaches? 

I am not convinced that the case law reflects two different approaches so much as two ways of describing the same approach. In my view, when prior cases describe harmless in two different ways, they are doing nothing more than describing the same coin from two opposite sides. Language in prior cases describing the harmless error test as asking whether the error “affected the verdict” may be stating nothing more than the other side of the question of of whether the verdict (i.e., the “result”) would have been different if not for the error.

If they are two approaches, the only difference between the two tests that I can think of is that under the “effect on the fact-finder” approach, an error can be harmful if it is something that the jury likely would have considered in the jury roorm, even if without the error, the jury would have reached exactly the same verdict relying on the other evidence in the case. 

A Better Test?  

I have a hard time understanding why the 4th DCA unanimously endorsed the “effect on the fact-finder” approach. How can there ever be “a miscarriage of justice” when the jury would have reached the same verdict? 

I understand the 4th DCA’s concerns about appellate courts re-weighing the evidence. The first thing any appellate attorney learns is that one should never make an argument that asks the appeals court to weigh the evidence to conclude that the jury reached the wrong verdict.

But examining the trial evidence seems unavoidable in performing a harmless error analysis regardless of the approach. That is particularly true in Florida, where the harmless error statute requires that harmless error be determined based on “an examination of the entire case.” Determining whether the error likely had an effect on the jury does not avoid that problem because one cannot determine how important evidence is without looking at its context.

I also understand the 4th DCA’s goal of enhancing predictability by creating a test that is intended to be less vague and to leave less room for arbitrariness. But I do not see how speculating about whether the jury considered particular evidence is any less vague than speculating about what result the jury would have reached if not for the error.

The 4th DCA also seems to have been concerned that its prior harmless error test was too stringent, i.e., that it made it too difficult to obtain a reversal. I have not done a statistical analysis, but I read almost every opinion issued by every DCA and the Florida Supreme Court. In my observation, which is informed but admittedly unscientific, the 4th DCA had as high a reversal rate before Special as any DCA in Florida.

So however its test was nominally described, I am not sure it was any more stringent in practice than the standards used by other DCAs. In my estimation, the 4th DCA’s ultimate formulation of the test, that an error will only be found to be harmless when the beneficiary of the error shows that is “more likely than not that the error did not contribute to the judgment” throws the balance too far in favor of reversal.

Under this test, I would expect that very few errors will be found to be harmless, and reversal will become increasingly common. As I said at the outset, there are errors in every trial. There is some evidence of this happening already. No doubt that is a good thing for parties that lose at trial. For parties that obtain favorable jury verdicts, not so much.

We Should Not Have to Wait Long for Clarification 

The real impact of the rule set down in Special has yet to be determined. The 4th DCA certified to the Supreme Court of Florida the question of what harmless error standard should be used in civil cases as a question of great public importance and the Supreme Court has taken up the issue. Briefing is complete, and the Supreme Court heard oral argument in April. It is now ripe for a ruling.

So we should not have too wait long to know how likely it will be that future mistakes, which will surely be made, will result in a new trial. 

It must be a trial lawyer’s worst nightmare. You’re in the middle of the trial you spent months preparing for. Your opening went well. Your witnesses are doing great. You can see that your client’s case is resonating with the jury. Your clients are looking hopeful. Opposing counsel isn’t.

You’re about to rest your case-in-chief. You ask the court for a recess so you can make sure opposing counsel has agreed to necessary stipulations, and that you’ve covered all of your bases. Opposing counsel moves for a directed verdict.

You’re suing a state hospital, and opposing counsel refers the court to Florida Statutes Section 768.28, the state’s limited waiver of sovereign immunity. You go through the statute in your mind. Subsection (6) – did I give written notice to the defendant and the DFS within 3 years of the time the claim accrued? Yes. Did I wait 6 months before filing the complaint? Yes.

Then you come to Subsection (7). Did I serve the complaint on the defendant? Yes, of course. Did I serve a copy of the complaint on the DFS? Uh-oh.

You call your office to arrange to get a copy of the complaint served on the DFS immediately. But is it too late? You feel your stomach tighten. You see visions of your clients’ files being flushed down the toilet. You can almost hear the judge granting a directed verdict. You wonder how much the defendant’s bill of costs will be. You imagine yourself telling your clients that you’ve lost. You hope they won’t cry. You hope they won’t sue you.

Okay, breathe. If you’ve gotten this far, you might just be able to keep going.

Yes, that’s right. In a case then known as Acanda v. Public Health Trust of Miami-Dade County, a Miami-Dade County Circuit Judge reserved judgment, then denied, a motion for directed verdict, even though the DFS wasn’t served until mid-trial. The jury found for the plaintiff. The 3rd DCA affirmed.

And in Public Health Trust of Miami-Dade County v. Acanda, No. SC10-302 (released June 23, 2011), the Florida Supreme Court (per Justice LaBarga) upheld the jury’s verdict. Why?

The Analysis:

The Supreme Court’s reasoning was threefold.

First, the Court agreed with the 5th DCA’s conclusion in Turner v. Gallagher, 640 So.2d 120, 122 (Fla. 5th DCA 1994), that unlike pre-suit notice under Subsection 768.28(6), service under Subsection (7) is not a “condition precedent” to bringing suit, and it doesn’t require that service be made at a particular time. So the plaintiff satisfied Subsection (7) when she served the DFS mid-trial, whether or not she did so before resting her case-in-chief.

Second, the Court held lack of service on the DFS under Subsection (7) is an affirmative defense, rather than an element on which the plaintiff bears the burden of proof. It reasoned that even the notice requirements of Subsection (6), which are conditions precedent to suit, aren’t “elements of the cause of action.” So the Subsection (7) service requirements, which aren’t conditions precedent, surely can’t be elements of the cause of action. As such, a directed verdict can’t be granted based on a failure to prove service on the DFS in the case-in-chief.

Third, the Court took issue with how the defendant attempted to allege noncompliance with Subsection (7) within the affirmance defense of failure to state a cause of action. To properly raise the issue, “such noncompliance must be pled with specificity and particularity.”

Rather than covertly stating the defense as “a ‘gotcha’ tactic,” the Court explained, it should be spelled out, and raised by pre-trial motion. The Court roundly condemned what it saw as the defendant’s “practice of trial by surprise,” in failing to allege this affirmative defense in sufficient detail as to put the plaintiff on notice that it related to service under Subsection (7).

Some Observations:

  1. The Court’s concern with vague pleading of affirmative defenses makes sense.  But how far does it go?  It’s fairly common for defendants to plead defenses generally.  Was the Court rejecting that practice generally in favor pleading defenses “with specificity and particularity”?
  2. It’s unclear what compelled the second part of the Court’s reasoning.  Extrapolating from Subsection (6), the Court concludes that service on the DFS isn’t an element of the cause of action, so the plaintiff can’t bear the burden of proof on it.  But in Levine v. Dade-County Schoolboard, 442 So.2d 210 (Fla. 1983) the Court held that the plaintiff does bear the burden of proof as to compliance with Subsection (6) even though it’s explicitly not an element of the cause of action.  And while lack of service in general is a defense, Florida Rule of Civil Procedure 1.140, the plaintiff still bears the burden of proving service.  See Re-employment Servs., Ltd. v. National Loan Acquisitions Co., 969 So. 2d 467 (5th DCA 2007).  Why not deal with service under Subsection (7) in the same manner?