In short: Usually not. Florida courts have applied judicial estoppel to stop borrowers who told the bankruptcy court they would surrender their home from later contesting the foreclosure on the merits. In Jabrane v. Bank of America, Orange County borrowers argued the bank’s own misstatement about when the loan changed hands should lift that bar. The Fifth District affirmed the foreclosure judgment without a written opinion on December 22, 2020.
The Facts
Bank of America, as trustee for a Morgan Stanley mortgage loan trust, filed a foreclosure against Touria Jabrane and Abdelkhalek Elhadiri in Orange County in June 2012, according to the argument. While the case was pending, the borrowers filed bankruptcy and stated they would surrender the property, listing the loan servicer, ASC, as the creditor. After the bankruptcy ended, U.S. Bank moved to substitute as trustee. The case went to trial in November 2019. After an evidentiary hearing, the trial court ruled the borrowers could not defend on the merits and entered a foreclosure judgment. They appealed (No. 5D19-3631).
Andrew B. Greenlee and Anthony N. Legendre II represented the borrowers on appeal, and Brandi Wilson represented the bank. The points below are what the lawyers argued, not findings by the court.
- The borrowers argued judicial estoppel did not apply because of the bank’s post-bankruptcy misconduct: its motion to substitute said U.S. Bank became trustee on July 2, 2012, after suit was filed, while its own corporate witness later said U.S. Bank acquired the business in November 2010. If that was true, the original plaintiff had no interest in the loan when it sued.
- They argued the bank never proved the surrender to ASC was a surrender to the plaintiff, never showed prejudice, and that without estoppel the bank would lose on standing.
- The panel asked whether the misconduct issue was preserved, since the trial court made no express finding on it and no rehearing was sought. The borrowers said it was implicitly denied and asked, at a minimum, for a remand.
- The bank argued the borrowers admitted the surrender, the loan had been in default for years, the plaintiff was the same trust throughout with only the trustee updated, and the borrowers knew ASC was Wells Fargo’s servicing arm. It argued prejudice was obvious from seven years of litigation, interest and advances.
The Decision
The Fifth District affirmed on December 22, 2020. The ACIS docket lists the disposition as “Per Curiam Affirmed,” with no written opinion, and the mandate issued January 12, 2021.
Because there is no opinion, the affirmance does not say whether the court rejected the misconduct argument, found it unpreserved, or found the estoppel elements proven. It means the foreclosure judgment stands.
The Law
An individual debtor whose consumer debts are secured by property must file a statement of intention in the bankruptcy saying whether the property will be surrendered or retained, under 11 U.S.C. § 521(a)(2). The Eleventh Circuit held in In re Failla, 838 F.3d 1170 (11th Cir. 2016), that debtors who state they will surrender a house may not then oppose the lender’s foreclosure in state court.
Florida courts apply judicial estoppel, an equitable doctrine that stops a party from taking a position in one case that contradicts a position it successfully took in another. Because it is equitable, the borrowers argued a party with unclean hands cannot invoke it.
If estoppel does not apply, the usual foreclosure rules govern, including the requirement that the plaintiff be entitled to enforce the note under section 673.3011 when it files. A party that wants the trial court to make findings it left out can ask for them in a motion for rehearing under rule 1.530; the panel noted no rehearing was sought here.
Lessons
- Surrendering a house in bankruptcy has consequences in the foreclosure. Borrowers who want to keep defending should talk to their bankruptcy lawyer before choosing surrender.
- A misconduct defense to estoppel needs a clear factual record and a ruling. Ask the trial court for express findings, and move for rehearing if it does not make them.
- Changes in the named trustee and the servicer can create real standing questions, but estoppel may keep a court from reaching them.
- A per curiam affirmance without an opinion decides only that case.
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
💼 Can a Bank Use Judicial Estoppel to Foreclose After Its Own Misconduct?
Read the Law on FloridaRules.net
The statutes and court rules discussed in this article, free to read on FloridaRules.net:
Go Deeper
- Surrender in Bankruptcy Prohibits A Homeowner From Defending Foreclosure!
- Homeowners Surrender Property in Bankruptcy, Then Continue to Defend Foreclosure in State Court
- Foreclosure Trial: Unlisted Power of Attorney and Undated Endorsements (Cintron v. Aurora)
Frequently Asked Questions
Can I still fight foreclosure if I surrendered my house in bankruptcy?
Usually not. Courts apply judicial estoppel or the bankruptcy surrender rule to stop debtors who said they would surrender the house from contesting the foreclosure. The borrowers in Jabrane tried to avoid that bar by pointing to the bank’s misconduct, and the judgment was affirmed.
What does surrendering a house in bankruptcy mean?
It means the debtor tells the court, in the statement of intention, that the debtor will give up the property to the secured creditor rather than keep it. The Eleventh Circuit has held that a debtor who surrenders may not then oppose the foreclosure.
What if the bank lied in the foreclosure case after my bankruptcy?
Judicial estoppel is equitable, so misconduct by the party invoking it can matter. But the borrower has to prove the misconduct and get a ruling on it. In Jabrane the trial court made no express finding, and the Fifth District affirmed without an opinion.
Does it matter which company I listed when I surrendered the house?
It can be argued, but courts look at whether the plaintiff is the same creditor or its successor. The Jabrane borrowers surrendered to the servicer, ASC, and argued that was not the plaintiff. The bank said the trust was the same throughout.
Talk to a Florida real estate litigation lawyer
Weidner Law, P.A. handles Florida real estate disputes, title problems and appeals from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
