In the same case where Chase Home Finance lawyers faked the court with an original note that wasn’t, Chase also ignored the new requirements of the Dodd Frank Act that give important rights to consumers

The Court misconstrued the law regarding amendments to pleadings

The Court had jurisdiction to entertain Defendants’ counterclaim
The Court initially denied Defendants’ motion for leave to file a counterclaim under the mistaken belief advocated by Plaintiff that such the federal claim included in the motion were outside the jurisdiction of the Court:
THE JUDGE: All right. Well, the
Court finds as follows: First of all, this
is a federal regulation, the Court
recognizes that. As to whether or not it
7 applies to this court, being a state court
as opposed to a federal court, is a
question that I would imagine there would
be some basis for deciding if it were clear
that it does apply to state courts.
Jurisdiction obviously is not
something that can be waived, but
jurisdiction somehow has to be conferred.
I do not see that this specifically confers
jurisdiction on the Court to decide this at
the state court level.

Trial Transcript, pg. 12, lines 3-17. Bold emphasis added.
However, in determining whether a state court is allowed to entertain jurisdiction over federally created cause of action, the Supreme Court has applied a presumption of concurrency. See e.g., Robb v. Connolly, 111 U.S. 624 (1884); Claflin v. Houseman, 93 U.S.130, 136 (1876); see generally Martin H. Redish & John Muench, Adjudication of Federal Causes of Action in State Court, 75 Mich. L. Rev. 311 (1976).
This presumption permits state courts to exercise jurisdiction over federally created causes of action as long as Congress has not explicitly or implicitly made federal court jurisdiction exclusive. Yellow Freight System, Incorporated v. Donnelly, 494 U.S. 820, 823 (1990).

In fact, in order [t]o give federal courts exclusive jurisdiction over a federal cause of action, Congress must, in an exercise of its powers under the Supremacy Clause, affirmatively divest state courts of their presumptively concurrent jurisdiction Yellow Freight System, Incorporated, 494 U.S. at 823 (citing Tafflin v. Levitt, 493 U. S. 455, 459-60 (1990)).

On the same token, Congress may expressly permit state courts to entertain federal claims which is what expressly occurred in the case at bar.
Specifically, Defendants’ counterclaim sought relief pursuant to Plaintiff’s violations of 12 C.F.R. §1024.41. That Regulation expressly provides that Defendants have the right to enforce the Regulation’s provisions pursuant to section 6(f) of RESPA (12 U.S.C. §2605(f)). 12 C.F.R. §1024.41(a). Under RESPA, state courts retain concurrent jurisdiction with federal courts to entertain §2605 violations. See 12 U.S.C. §2614; see also Green v. JPMorgan Chase Bank, N.A., 109 So. 3d 1285 (Fla. 5th DCA 2013) (concluding that trial court erred in denying defendant/borrower’s motion to add a counterclaim for RESPA violations in a foreclosure action); Alejandre v. Deutsche Bank Trust Co., 44 So. 3d 1288 (Fla. 4th DCA 2010) (reversing summary judgment of foreclosure where bank failed to factually refute borrower’s RESPA affirmative defense);Byrd v. Homecomings Financial Network, 407 F. Supp. 2d 937, 943 (N.D. Ill 2005) (providing that “state and federal courts have concurrent jurisdiction over RESPA.”)

Therefore, it is undisputed that the Court had jurisdiction to entertain Defendants’ counterclaim. As a result, it was an error to deny Defendants’ motion to amend on that ground.
The Court could not deny the motion merely based upon “representations of counsel”
The Court also denied Defendants’ motion upon the “representations” of Plaintiff’s counsel:

Secondly, there is the literal
reading of this that says that the first
notice or filing required by applicable law
is one of the determining time periods.
And that means that there has to be a
complete loss mitigation application filed
after the first notice or filing required
by applicable law.
I don’t see how that has been
complied with under the response that
plaintiff’s counsel has given us that they
do not have a complete loss mitigation

Trial Transcript, pg. 12, lines 18-25 through pg. 13, lines 1-5.
THE JUDGE: Well, there is a
definition here of complete loss mitigation
application and there is, at least, a
representation by an officer of the court
that such does not exist. Under the
circumstances, then, therefore, the filing
of the counterclaim would be premature, at
least from a standpoint of delaying this
That’s the reason for the Court’s
ruling that the motion is denied.

Trial Transcript, pg. 15, lines 14-22.

Where, as here, a supplementary counterclaim is filed under Fla. R. Civ. P. 1.170(e), the usual rule on amending applies. See Scherer v. Scherer, 150 So. 2d 496 (Fla. 3d DCA 1963).
“[R]efusal to allow amendment of a pleading constitutes an abuse of discretion unless it clearly appears that allowing the amendment would prejudice the opposing party; the privilege to amend has been abused; or amendment would be futile.” Spradley v. Stick, 622 So. 2d 610, 613 (Fla. 1s t DCA 1993).
“A proposed amendment is futile if it is insufficiently pled or is insufficient as a matter of law.” Quality Roof Services, Inc. v. Intervest National Bank, 21 So. 3d 883, 885 (Fla. 4th DCA 2009).
Here, none of the three exceptions to the amendment rule were present. Plaintiff was not prejudiced by the proposed amendment since the amendment was only made because of its own actions; Defendants did not abuse their privilege to amend as the amendment was only made once the cause of action accrued; and the amendment would not have been futile because the counterclaim was not insufficiently pled or insufficient as a matter of law.
Since “representations” of counsel clearly do not fit in any of these categories, the Court abused its discretion in denying Defendants’ motion.
A new trial must therefore be ordered because any damages awarded under the counterclaim would off-set and judgment in favor of Plaintiff
When a counterclaim is filed in a foreclosure action, the aggregate amount of damages between the two lawsuits should be reflected in a single judgment. See Maynard v. Household Finance Corp. III, 861 So. 2d 1204, 1208 (Fla. 2d DCA 2003).
Therefore, a new trial should be ordered because the damages suffered by Defendants require the Court to reduce the amount of damages awarded to Plaintiff.
In fact, if the amount of damages awarded to Defendants exceeds the amount of damages awarded to Plaintiff, Defendants are entitled to the aggregate amount.
Therefore, a new trial should be awarded.
The Court misconstrued the law regarding HUD conditions precedent
Finally, the Court found that Plaintiff complied with 24 CFR §203, et seq. See Trial Findings and Orders, Trial Proceedings, ¶4.
However, the undisputed evidence reveals that Plaintiff did not comply with 24 C.F.R. §203.604(b), which requires a mortgagee of a HUD-insured mortgage to conduct “a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid.” Id.
Since Plaintiff admitted that a face-to-face interview did not occur before three full monthly payments under the mortgage went unpaid, Plaintiff did not fulfill its contractual conditions precedent to acceleration and foreclosure.
Therefore, the judgment should be vacated.

Leave a Reply