“Having your cake and eating it too!” This may be a fair reference to Wednesday’s decision from the Third District Court of Appeal in Gonzalez v. Federal National Mortgage Ass’n, Case No. 3D17-1246 (Fla. 3rd DCA, August 1, 2018).

First, the critical facts in very short summary. The Borrowers defaulted on their mortgage and note in April 2007. The lender’s initial mortgage foreclosure complaint was dismissed for, as the court noted, a reason not clear in the record.

On June 12, 2013 a new mortgage foreclosure was filed alleging borrowers’ default from June 1, 2007, and that the plaintiff was exercising its right to accelerate all amounts due. A bench trial resulted in a judgment of foreclosure including apparently monies due more than five years before the filing of the “new” 2013 complaint.

The Third District cited Bartram v. US Bank Nat. Ass’n, 211 So.3d 1009 (Fla. 2016), for the:

The right to file a subsequent foreclosure action – and to seek acceleration of all sums due under the note – so long as the foreclosure action was based on a subsequent default, and the statute of limitations had not run on that particular default.

Id. at 1021 (Emphasis added by court). Thus, the Third District relied on Bartram to allow a lender to recover judgment for “old” installments that otherwise would be extinguished by the statute of limitations merely by filing a complaint accelerating all installments of the debt and alleging a default within the limitations period!

The Third District acknowledged conflict with the Fifth District’s recent decision in Velden v. Nationstar Mortgage, LLC, 234 So.3d 850 (Fla. 5th DCA 2018). Thus, the stage is set for the Supreme Court to rule, undoubtedly after three of the Bartram judges rotate off the Supreme Court at the beginning of next year.

Recognizing that Supreme Court review may be lengthy, and that there may also be similar appeals on the dockets of other DCAs, we are apparently going to enter an area of great uncertainty on this issue.

While we wait for the Supreme Court to address the conflict, it likely is worth re-reading Bartram. The Third District’s interpretation is questioned. Strangely, the Third District did not quote the certified question of great public importance as rephrased by the Supreme Court:

Does acceleration of payments due under a residential note and mortgage with a reinstatement provision in a foreclosure action that was dismissed pursuant to Rule 1.420(B), Florida Rules of Civil Procedure, trigger application of the statute of limitation to prevent a subsequent foreclosure action by the mortgagee based on payment defaults occurring subsequent to dismissal of the first foreclosure suit?

Bartram, 211 So.3d at 1012 (Emphasis added). As the Bartram court laid out the facts, the initial mortgage foreclosure action was dismissed on May 5, 2011. Id. at 1014.

The issue in Bartram was simply, in essence, the right to deaccelerate and proceed anew as if acceleration had never occurred in the first place. The Supreme Court allowing a lender to “seek acceleration of all sums due” did not appear to provide any green flag that to “seek” would mean all defenses are waived merely because the magical wand of acceleration passed over the case.

The Gonzalez decision is anticipated to lead to absurd results. Consider a lender failing to file an action to enforce a note with installment payments and an acceleration provision until more than five years after the initial installment default. If there was a suit just for that initial payment, the statute of limitations would presumably bar that claim. Was it the intent of Gonzalez that all a lender would have to do to breathe life into an installment payment extinguished because of a limitations period, would be to accelerate, no matter how long after the default. This would have the practical effect of erasing a statute of limitations application until only five years after the last installment payment was due.

In addition, the Gonzalez decision appears to turn on its head the rational of Bartram, that under the mortgage text acceleration does not occur until judgment is entered. The Third District’s rational could be read to mean that when a lender accelerates all defenses are extinguished! The Gonzalez court does not quote from the mortgage and note acceleration provisions however, if the Gonzalez’ terms are similar to the Bartram terms, then acceleration and the rights that flow from it cannot occur until the entry of judgment which would not retroactively breathe life into installments extinguished five years before the complaint was even filed.

As the time for re-hearing rapidly comes to a close we will see if a motion is filed.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke