In a highly anticipated ruling, after rehearing en banc, Florida’s Third District Court of Appeal reversed its prior ruling in Deutsche Bank Trust Co. America v. Beauvais, 40 Fla. L. Weekly D1 (Fla. 3d DCA Dec. 17, 2014), and substituted a new opinion in its place.
Beauvais addressed the issue of whether the statute of limitations could defeat a second mortgage foreclosure action after a lender had previously exercised its right to accelerate all payments due under a loan and filed a prior foreclosure action that had been involuntarily dismissed. In December 2014, Judges Shepherd, Emas and Scales ruled that the “acceleration of the debt triggered the commencement of the statute of limitations, and because the installment nature of the loan payments was never reinstated following the acceleration, there were no ‘new’ payments due and thus could be no ‘new’ default following the dismissal without prejudice of the initial action.” Based on that finding, the Court concluded that the statute of limitations began to run from the date that the loan was initially accelerated, had expired by the time the second foreclosure action was filed, and precluded the second foreclosure action. In its initial opinion, the 3rd DCA distinguished the Florida Supreme Court’s ruling in Singleton v. Greymar Assocs., 882 So.2d 1004 (Fla. 2004), by noting that “Singleton involved an involuntary dismissal with prejudice of the initial action, whereas [Beauvais] involved an involuntary dismissal without prejudice,” and finding that the former “operated as an adjudication on the merits”, while the latter did not. The Court noted a potential conflict with U.S. Bank Nat. Ass’n v. Bartram, 140 So.2d 1007 (Fla. 5th DCA 2014) review granted, Bartram v. U.S. Bank, Nat. Ass’n, Nos. SC14-1265, SC14-1266, SC14-1305 (Fla. Sept. 11, 2014); and certified conflict with Evergrene Partners, Inc. v. Citibank, N.A., 143 So.2d 954 (Fla. 4th DCA 2014).
On August 3, 2015, the 3rd DCA ordered rehearing en banc and requested supplemental and amicus briefs from various organizations. The 3rd DCA held oral argument in Beauvais on November 12, 2015. Meanwhile, the Florida Supreme Court held oral argument in Bartram on November 4, 2015.
A new 5-4 opinion was issued in Beauvais yesterday, with the entire original panel (Shepherd, Emas and Scales) in the dissent. Judge Wells, writing for the majority, found that Singleton controlled the outcome and allows for multiple actions for individual defaults with accompanying accelerations. Specifically, the Court held that “the dismissal of a foreclosure action accelerating payment on one default does not bar a subsequent foreclosure action on a later default if the subsequent default occurred within five years of the subsequent default action.” The 3rd District went on to clarify that it simply does not matter whether the initial foreclosure action was dismissed with or without prejudice. The new opinion concludes that the parties were returned to the status quo that existed prior to the filing of the initial lawsuit and the subsequent lawsuit was not barred by the statute of limitations.
The 3rd DCA’s new opinion in Beauvais resolves the inter-district conflict and aligns the 3rd District with the other Florida courts that have addressed this issue. This is a significant change of course for the 3rd DCA and provides much needed clarity to lenders.
David Greene is a commercial litigation partner in Fox Rothschild’s West Palm Beach office. His practice focuses primarily on banking litigation, real estate litigation, title insurance litigation, and construction litigation. You can reach David at 561-804-4441 or firstname.lastname@example.org.