Tag Archive for: LLC v. Krondes

FL App Ct Holds Res Judicata Does Not Bar New Foreclosure Action Based on New Defaults

The Fourth District Court of Appeal of the State of Florida,held that res judicata does not render a mortgage unenforceable or preclude a subsequent foreclosure action based on a default not alleged in the prior action.

The mortgage and note was sold and assigned to another entity (“Lender”).  Borrower defaulted on the note and failed to pay homeowner association fees assessed by her homeowner association (“HOA”).

Lender’s predecessor in interest filed suit to foreclose in August 2007, alleging a default in the payment due on April 1, 2007.  The complaint named HOA as a co-defendant because of its potential junior lien interest. The First Foreclosure by Lender was eventually dismissed.

Between the dismissal of the first foreclosure action and the Lender’s filing of its second foreclosure action, HOA obtained title to the subject property by foreclosing its own homeowner association lien and purchasing the property at the court-ordered foreclosure sale.

HOA  filed a motion for final summary judgment, arguing that the involuntary dismissal of Lender’s first foreclosure action operated as an adjudication on the merits pursuant to Florida Rule of Civil Procedure 1.420(b), and thus, Lender was barred from re-litigating the claim.  The trial court agreed and granted HOA’s motion.

HOA to quiet title on the basis of res judicata and sought a court order removing Lender’s mortgage as an encumbrance on the property.  The trial court also granted judgment on HOA’s quiet title in favor of HOA.

The Appellate Court in this case agreed with Lender that despite an adjudication on the merits in a prior action to foreclose a mortgage, res judicata did not render the mortgage unenforceable by precluding enforcement actions on subsequent defaults

Courts have  previously held that res judicata does not bar the later foreclosure action, because a new default — based on a different act or date of default not alleged in the dismissed action — creates a new cause of action that is not barred by res judicata.  See Singleton v. Greymar Assocs., 882 So. 2d 1004, 1008 (Fla. 2004); Star Funding Solutions, LLC v. Krondes, 101 So. 3d 403, 403 (Fla. 4th DCA 2012).

The Court turned to HOA’s quiet title claim.  The Court reasoned that because each payment default created a basis for a subsequent foreclosure, the note and mortgaged remained a valid and enforceable lien against the property, and did not, as a matter of law, constitute a cloud on the property supporting a quiet title claim.  See Kaan v. Wells Fargo Bank, N.A., 981 F. Supp. 2d 1271, 1274 (S.D. Fla. 2013).

Accordingly the Appellate Court reversed.

http://www.4dca.org/opinions/Sept.%202014/09-24-14/4D13-1992.op.pdf

 

 

Carol A. Lawson, Esq., 28870 U.S. Hwy 19 #300, Hodusa Towers, Clearwater, FL 33761

Phone: (727) 410-2705;   email: calh@gate.net

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