Years ago I filed a lawsuit on behalf of an out of state corporation client.  The opposing attorney filed a motion to dismiss because the corporation I was suing on behalf of was not registered with the Florida Secretary of State.  Fast forward to now when I’m building my practice on defending homeowners in foreclosure and the failure to register motion to dismiss issue is back…in a big way.

Capacity is Almost Never Plead In Foreclosure Cases

I have consistently argued that Florida law and Florida Rules of Civil Procedure require a plaintiff to be properly identified in order to maintain their lawsuit.  Properly identified means in the body of the complaint the full corporation or entity name is described along with its state or jurisdiction of registration.  (i.e. Bank of America a North Carolina Corporation or Bank of America a National Association chartered pursuant to the National Banking Act.)  In the vast majority of foreclosure cases filed in this state, the Plaintiff fails to identify who it is, how it is chartered and how it has the authority to bring the suit.  At best, you might find a plaintiff identified as, “U.S. Bank, N.A.”  What does “NA” stand for?  On a beer bottle it means “Non Alcoholic”. (I know this because it is written out.) While I’m 100% certain what it means in a foreclosure case, I’m pretty sure it means, “National Association”.  I’m also pretty sure that in some instances when the Plaintiff is “US Bank, NA” that plaintiff may (emphasis added) be exempt from some state laws.   I say may because I’ve actually read the National Banking Act and I’m very clear about the exemption/preemption language in the Act.  Some acts of NA plaintiffs are exempt and some state laws are preempted….but many more (and potentially the important ones) are not.  Taking deposits and collecting money is clearly exempted, but I’m not at all convinced that engaging in trust related activities is.  I’m also pretty sure that breaking down doors and unilaterally repossessing a borrower’s home without court process is not preempted by state law either. Anyway, the point is, Plaintiffs must be required to plead out their capacity at the start of these cases so that a whole range of other issues related to the Plaintiff’s action are on the table from the front end.

I’ll follow up more on this case later, but after this Order was issued, the Plaintiff amended their complaint to add yet a third party into the mix…the mortgage was written by World Savings, then they assert that World Savings was assumed by Wachovia, but that after they filed Wachovia was assumed by Wells Fargo….and so now a third party who conceivably has an interest in this case is being drawn in.  Problem is, the version of “Wells Fargo” they plead in is different than the evidence they attached to their amended complaint to prove up that Wells Fargo was the proper party in interest…so I’ve filed a Second Motion to Dismiss in this case…..stay tuned.

The full text of the opinion as published in the Florida Law Weekly is found below: Online Reference: FLWSUPP 1702MATA

ORDER

THIS MATTER, having come on consideration from the Defendant’s Motion to Dismiss, filed by counsel for Defendant Matthew Weidner, this Court having reviewed the pleadings filed in this matter and accepted argument of counsel who appeared before the Court, it is hereby, ORDERED AND ADJUDGED that:

1. In its Motion to Dismiss, counsel for Defendant noted that the only identification of the Plaintiff appears in the caption of the Complaint and the first paragraph where the Plaintiff is identified simply as, “Wachovia Mortgage, FSB, F.K.A., World Savings Bank”. The Plaintiff’s name is not set off or specified within the body of the Complaint or in any other pleading nor is any description provided to explain the legal nature of the entity or to define what the initials “FSB” stand for.

2. Counsel for Defendant, in its Supplemental Memoranda in Support of Motion to Dismiss, cited Florida Rules of Civil Procedure Rule 1.120(a) Pleading Specific Matters which provides that:

(a) Capacity. It is not necessary to aver the capacity of a party to sue or be sued, the authority of a party to sue or be sued in a representative capacity, or the legal existence of an organized association of persons that is made a party, except to the extent required to show the jurisdiction of the court. . . .When a party desires to raise an issue asto the legal existence of any party, the capacity of any party to sue or be sued, or the authority of a party to sue or be sued in a representative capacity, that party shall do so by specific negative averment which shall include such supporting particulars as are peculiarly within the pleader’s knowledge.

3. Counsel for Defendant also cited Florida Rules of Civil Procedure Rule 1.110(b) which requires that a Complaint include a “short and plain statement of the grounds upon which the court’s jurisdiction depends. . .” Counsel for Defendant asserted that by failing to plead or specify in what capacity the Plaintiff brings suit and by failing to define or identify in any way the nature of its legal entity, the Plaintiff has not plead that it has the capacity to maintain suit before this Court.

4. “Capacity to sue” is an absence or legal disability which would deprive a party of the right to come into court. 59 Am.Jur.2d Parties § 31 (1971). This is in contrast to “standing” which requires an entity have sufficient interest in the outcome of litigation to warrant the court’s consideration of its position. Keehn v. Joseph C. Mackey and Co., 420 So.2d 398 (Fla.App. 4 Dist. 1982)

5. Counsel for Plaintiff introduced a Response to Defendant’s Motion to Dismiss in which it claimed the Plaintiff was both a Federal Savings Bank and not required to register with the Secretary of State in order to establish capacity and that it was a foreign corporation and exempt from registration pursuant to Florida Statute 607.1501. The inconsistent allegations made in Plaintiff’s response are not facts that have been plead and such facts must be plead so that Defendant may respond to them through a responsive pleading.

6. Counsel for Defendant represented to the Court that his research revealed few Florida Court opinions which address the issue of capacity to sue, but urged this Court to consider Federal Court opinions interpreting Federal Rule of Civil Procedure 9(a) from which Florida Rule of Civil Procedure Rule 1.120(a) is derived.

7. The issue of capacity to sue may be raised by motion to dismiss where the defect appears on the face of the complaint. Hershel California Fruit Products Co. v. Hunt Foods, 111 F. Supp. 603 (1975), quoting Coburn v. Coleman, 75 F. Supp. 107 (1974); Klebano v. New York Produce Exchange, 344 F.2d (2nd Cir. 1965).

8. Failure to raise the issue of a Plaintiff’s capacity by a specific negative averment has been held to constitute a waiver of that defense. McDonough Equip. v. Sunset Amoco West, 669 So.2d 300 (Fla.App. 3 Dist. 1996); Plumbers Loc. U.N. 519, Miami Fla. v. Serv. Plbg., 401 F. Supp, 1008 (1975); and see Sun Val. American Land Lease, 927 So.2d 259 (Fla.App. 2 Dist. 2006); Shaw v. Stutchman, 105 Nev. 128 (1989).

9. The Defendant’s Motion to Dismiss is GRANTED and the case is dismissed without prejudice except that the Plaintiff shall have twenty (20) days from the date of this Order to file an Amended Complaint to address the matters raised within the Defendant’s Motion to Dismiss. 10. If the Plaintiff Amends its Complaint the Defendant shall have twenty (20) days from the date of receipt of Amended Complaint to file its responsive pleading.

A Motion to Dismiss filed by Matthew Weidner that was granted by Pinellas County  Judge Anthony Rondolino was recently published in the Florida Rules Reporter.  The published citation, which challenges the capacity of Plaintiffs to file foreclosure lawsuits against Defendants without proving their legal capacity to do so has the potential to grind foreclosure cases across the country to a halt.

For more information on the publication, click here.

On December 16, 2009 Pinellas County Circuit Court Judge Anthony Rondolino granted a Motion to Dismiss which was filed by St. Petersburg attorney Matthew D. Weidner on December 16, 2009.  The foreclosure case was filed by Wachovia Mortgage against Weidner’s Client, Pinellas County resident Anne Matacchiero.

Weidner’s Motion to Dismiss asserted that because the entity filing the lawsuit was not properly identified as a Florida corporation, that Plaintiff could not continue its pursuit of the case according to Florida states and rules of civil procedure that restrict the activities of out of state corporations.

According to Weidner, the ruling has major impact on foreclosure cases filed across the State of Florida and in Pinellas and Hillsborough County in particular because the Plaintiff’s are not identified as required by law in the vast majority of cases.  Weidner further claims that, “If this argument was effectively made and the same ruling issued, it could result in approximately 70% of the cases currently pending in Pinellas County being dismissed.”

Does the Plaintiff have the right to foreclose?

Whether the Plaintiff that has filed foreclosure cases across the country has the capacity or the standing to maintain the lawsuits they’ve filed is increasingly becoming a key issue in many cases.  The majority of the loans that are being foreclosed on in courts around the country are no longer held by the bank or mortgage company that made the loan in the first place.  When the Plaintiff filing the lawsuit is not the original lender, real questions exist about whether they have the legal authority required to be pursuing the foreclosure case against the homeowner.  An even more complicated issue exists when the Plaintiff filing the lawsuit is not a corporation, but is a trust company or some other exotic or shadow entity that claims to be pursuing the foreclosure case on behalf of another entity as is often the case.

Can the Plaintiff produce the documents necessary to foreclose.

Much attention has been given over the last several months to the fact that oftentimes, the Plaintiffs filing foreclosure lawsuits are not able to produce the basic documents they need to file a foreclosure lawsuit, much less all the documents they need to produce in order to win a foreclosure case. Examples of documents that need to be produced include the note, assignment of mortgage and an accurate statement of account.  Because many lenders cannot even prove they are qualified or entitled to appear in court, they never get the point of producing the documents necessary to effectively proceed with their foreclosure case.

For more information, contact Matt Weidner at www.mattweidnerlaw.com