It really is a sad and scary state of affairs when a bank can waltz into court with an obviously forged promissory note and then …. just waltz right out of court with a Final Judgment of Foreclosure to the tune of more than a million bucks. Well, that is precisely what happened in a foreclosure case that I recently defended. Now, it is very difficult to actually prove up that a document is a fraud or a forgery. In this case, we had a qualified document examiner, we had the original closing file, we had the original closing attorney and we had the borrower all in court screaming
JUDGE, THAT PROMISSORY NOTE IS FORGED!
To which the bank attorney responded:
JUDGE, JUST IGNORE ALL THIS FRAUD AND FORGERY, GIVE US A JUDGMENT!
And what do you know, but the judge did just that…granting a Final Judgment of Foreclosure despite me arguing over and over and over again.
It’s not the first time a court has ignored proven fraud and forgery in a foreclosure case….and it apparently won’t be the last. In fact, just last week I had a Final Judgment of Foreclosure entered even after I had credible testimony from one of the property owners that she did not sign the mortgage. But in the Sanabria v. Pennymac case, the Appellate Court reversed and gave us a nice written opinion, found here
The circuit court’s ruling, which deemed the homeowners’ authenticity defense as having been improperly pleaded, was premised on the sufficiency of their pleading. We review such an issue de novo. See Ladner v. AmSouth Bank, 32 So. 3d 99, 103 (Fla. 2d DCA 2009) (“The determination of the sufficiency of a pleading is a matter of law and subject to a de novo review.”); Mercedes Lighting & Elec. Supply, Inc. v. Dep’t of Gen. Servs., 560 So. 2d 272, 277 (Fla. 1st DCA 1990) (“[A] decision whether a pleading or motion is legally sufficient involves a question of law subject to de novo review by the appellate court.”).
Throughout the proceedings below and in this appeal, the parties and the circuit court have framed the sufficiency of the homeowners’ defense in terms of section 673.3081, Florida Statutes (2012). Cf. Riggs, 36 So. 3d at 933 (quoting statute and affirming summary judgment in favor of loan servicing company where authentication of the note was not at issue). That statute, a part of Florida’s Uniform Commercial Code, includes what is arguably a heightened civil pleading requirement when a dispute over a signature’s authenticity is raised in connection with a negotiable instrument such as a mortgage note. Section 673.3081(1) reads, in relevant part:
In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature.
Pennymac Trust likens the statute’s passing reference to “specifically” denying a signature’s authenticity to the specificity required to plead a cause of action for fraud under Florida Rule of Civil Procedure 1.120(b): “In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with such particularity as the circumstances may permit.” The circuit court—and to a large measure, the homeowners, as well—appeared to accept Pennymac Trust’s underlying premise that section 673.3081(1) alters civil pleading practice by imposing a heightened specificity requirement when the authenticity of a note’s signature is challenged. Proceeding under that assumption, the homeowners argue that they met this heightened standard of pleading with their ninth affirmative defense.
At the outset, we note the peculiar dilemma of applying a statutory provision that purports to prescribe an aspect of civil practice or procedure. Cf. Massey v. David, 979 So. 2d 931, 937 (Fla. 2008) (“Moreover, where [the Florida Supreme Court] has promulgated rules that relate to practice and procedure, and a statute provides a contrary practice or procedure, the statute is unconstitutional to the extent of the conflict.”); Caple v. Tuttle’s Design-Build, Inc., 753 So. 2d 49, 53 (Fla. 2000) (“The distinction between substantive and procedural law is neither simple nor certain . . . .”); In re Commitment of Cartwright, 870 So. 2d 152, 158 (Fla. 2d DCA 2004) (“The fact that a statutory provision could appropriately be labeled `procedural’ does not necessarily mean that it violates article V, section 2(a) [of the Florida constitution].”); Adhin v. First Horizon Home Loans, 44 So. 3d 1245, 1251 (Fla. 5th DCA 2010) (recognizing that where “a statute contains some procedural aspects, but those provisions are intimately intertwined with the substantive rights created by the statute, the statute will not be viewed as impermissibly intruding on the practice and procedure of the courts in a constitutional sense”).
Regardless, under either a general or a heightened, “specific” pleading standard, we are satisfied that the authenticity of Ms. Sanabria’s signature was an issue that was adequately pleaded and presented for adjudication. None of the cases Pennymac Trust cites in support of affirmance persuades us otherwise. Indeed, the few Florida decisions to address the pleading requirement that section 673.3081(1) appears to impose only arise in the context of a defendant who failed to plead the issue of authenticity as an affirmative defense. See, e.g., Davis v. Timeshare Travel Int’l, Inc., 489 So. 2d 47, 48-49 (Fla. 2d DCA 1986) (noting, in dicta, that guarantor’s equivocating testimony about her signature could not overcome statutory presumption of its validity where she had only pleaded a general denial to the lender’s claims within her answer); Riggs, 36 So. 3d at 933 (“Nothing in the pleadings placed the authenticity of Alday’s signature at issue.”); Lipton v. Se. First Nat’l Bank of Miami, 343 So. 2d 927, 928 (Fla. 3d DCA 1977) (holding that general denials in response to a bank’s complaint failed to meet the requirements of section 673.307(1) and so the borrower’s signatures were deemed admitted); Ferris v. Nichols, 245 So. 2d 660, 661 (Fla. 4th DCA 1971) (observing that defendant, who asserted no affirmative defenses, failed to plead the issue of a signature’s authenticity; “[h]ad the defendant desired to deny that he signed the note, he should have done so by a specific denial addressed to the appropriate allegations in the complaint”).
Here, however, the homeowners fashioned an affirmative defense that plainly denied the authenticity of Ms. Sanabria’s signature on a specific document: “the copy of the note attached to the complaint does not contain Defendant’s signature and is not the note signed by Defendant.” The court and the parties were adequately apprised by this defensive pleading that the homeowners were challenging the veracity of Ms. Sanabria’s signature on the note Pennymac Trust sought to enforce in foreclosure. Cf. VonDrasek v. City of St. Petersburg, 777 So. 2d 989, 991 n.1 (Fla. 2d DCA 2000) (quoting commentary to rule 1.110: “The contents of a pleading . . . should clearly and adequately inform the judge and the opposing party . . . of the position of the pleader”). The homeowners sufficiently alleged their denial of a signature’s authenticity in their affirmative defense, and they were entitled to have that issue decided in their case.