Imagine you are a defendant in a mortgage foreclosure lawsuit in Florida. You borrowed money, signed a promissory note and a mortgage, and defaulted on the loan. You have been sued by the lender (or an assignee of the lender), who is the plaintiff in the lawsuit. You have filed an answer and affirmative defenses. The plaintiff now moves for summary judgment, claiming there are no genuine issues of material fact and they are entitled to judgment, without a trial, as a matter of law. How do you respond to this?

In defending against summary judgment motions in foreclosure cases, I have seen many mistakes made by plaintiff’s counsel. This article describes the three most common mistakes I have seen. Sometimes all three mistakes are made in the same summary judgment motion, and sometimes only one of them. Any one of these mistakes can be fatal to the success of a summary judgment motion. These mistakes are especially prevalent in cases filed by foreclosure mill law firms seeking to foreclose on residential property. But I have seen the same mistakes made in commercial foreclosures where the lenders are represented by prestigious law firms.

Mistake #1: Authenticated Promissory Note Missing from Summary Judgment Evidence

In a mortgage foreclosure action, introduction into evidence of the original promissory note is central to the ability of the plaintiff to maintain the action and prove a defendant’s liability. See, e.g., State Street Bank and Trust Co. v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). To establish liability on a motion for summary judgment, the promissory note is one of the most important items of summary judgment evidence that must be served. The Florida court rules require that all summary judgment evidence on which the movant relies must be served at least 20 days before the time fixed for the hearing.

Surprising as it may seem, plaintiffs sometimes fail, in their summary judgment evidence, to include the promissory note. This failure makes the summary judgment motion dead on arrival.

Even if the plaintiff includes the promissory note in their summary judgment evidence, they sometimes fail to include evidence as to the authenticity of the promissory note. § 673.4011, Florida Statutes, provides that a person is not liable on an instrument unless the person signed the instrument. (A promissory note is a type of instrument.) In order to establish the borrower’s liability on a promissory note, the summary judgment evidence must include evidence that the borrower actually signed the note.

Unless the borrower has admitted they signed the note, this is a fact that must be proved by the lender in order to obtain a summary judgment. In many cases where the borrower has not admitted they signed the note, I have been surprised by the plaintiff’s failure to include this crucial evidence. The failure to include this evidence can destroy a summary judgment motion in a foreclosure case.

Mistake #2: Failure to Include Admissible Evidence of the Amount Owed

The plaintiff’s summary judgment evidence will usually include an affidavit from a representative of the lender in which they state the amount that is owed on the loan based on their review of the lender’s books and records. Sometimes, however, the affidavit and summary judgment evidence fail to include the documentation that was reviewed in order to determine the amount they are claiming is owed.

The problem is that, unless the documents on which the statements as to amount owed are based are also included in the affidavit or otherwise in the summary judgment evidence, the statement in the lender’s affidavit as to the amount owed violates the “best evidence rule,” and is inadmissible hearsay. The “best evidence rule” is embodied in § 90.952, Florida Statutes. When a party is trying to prove the contents of a writing, only the original or duplicate of the writing is admissible. See, e.g., Garcia v. Lopez, 483 So. 2d 470 (Fla. 3d DCA 1986).

The documents the lender’s representative reviewed may be admissible under the business records exception to the hearsay rule, but only if the plaintiff, though its affidavit, establishes the proper predicate for their admission, including their proper authentication. However, it would be the documents themselves that would be made admissible thereby, not the representative’s opinion or summary of what he or she thinks the records show.

The representative’s statements as to the amount owed, standing alone, are merely his or her opinion of what is contained in unverified out-of-court writings, and are offered for the purpose of establishing the truth of the matters asserted, making them hearsay, which is inadmissible in evidence. The documents themselves are hearsay, but could be made admissible under an exception to the hearsay rule. Without the documents being in evidence, the representative’s statements about what the documents say become hearsay about hearsay, i.e., double hearsay. I have been shocked at how many times I have seen this mistake made by plaintiffs in foreclosure lawsuits.

Mistake #3: Failure to Disprove All Affirmative Defenses

When a plaintiff moves for summary judgment, the plaintiff has the burden of disproving all of the defendant’s affirmative defenses. See Haven Fed. Sav. & Loan Ass’n v. Kirian, 579 So. 2d 730, 733 (Fla. 1991)(“A court cannot grant summary judgment where a defendant asserts legally sufficient affirmative defenses that have not been rebutted”). In other words, in order to have a chance to obtain summary judgment, the plaintiff must either present admissible evidence to disprove the defendant’s affirmative defenses, or show that the defenses are legally insufficient, meaning they are not valid defenses even if the alleged facts supporting them are proven.

Especially in residential foreclosures, the lender moving for summary judgment often completely ignores the defendant’s affirmative defenses. This omission eviscerates the lender’s ability to obtain summary judgment. Even if the lender disproves some but not all of the affirmative defenses, the summary judgment motion must be denied. All affirmative defenses must be addressed and disproved in the summary judgment motion in order for the motion to have a chance of success.

Conclusion

These mistakes are most often made in residential foreclosures. To be effective, objections must be properly and timely raised in opposition to a summary judgment motion. For borrowers who need time to work out a loan modification or short sale, competent legal representation can be a worthwhile expenditure.

© 2013 Stephen Verbit. All rights reserved.