I’m a dirt and death lawyer. That means I practice in real estate and probate; the practice areas often merge. A few basics:
- If ever someone brings to my office a trust or purports to act on behalf of a trust (like suing my client or mortgaging a property or anything else), I demand to see the Original Trust Agreement that details the powers.
- As a title attorney, I cannot rely on any actions taken by that alleged trustee unless I review the Original Trust and confirm that the trust actually grants the trustee the power to do what they seek.
- How have we gotten to a situation that hundreds of thousands of foreclosure cases are filed when no one has verified that the trust allows the trustee to act?
- Why is the state failing to enforce regulations and requirements on trusts?
A long, long time ago I started raising capacity and standing defenses, both generally and specifically citing Florida Statutes 609.01….I have yet to have a satisfactory response from the Plaintiffs. I also raise Florida Statutes Chapter 658 and 660 Just for good measure. Today one of the very bright attorneys who reads this blog shared with me both an excellent case and her thoughts. In the spirit of “sharing with the class”, I post the case first, then her comments below. I strongly encourage everyone to read and consider how this applies to your cases:
(As is the practice if this good attorney wants to claim credit for her work, please log in and leave a comment. It’s great work, and the excellent attorney certainly deserves credit for providing some good information for us all to chew on, I just don’t want to reveal anyone’s identity that supplies information unless they specifically direct me to. The best way is to log in and provide additional comments.)
Make sure to log in and review the case first:
PLAINTIFF IS DOING BUSINESS IN FLORIDA AS AN UNREGISTERED TRUST IN VIOLATION OF FLORIDA LAW
Defendant requests the Court to dismiss the Plaintiff’s complaint pursuant to Rule 1.210(a), 1.130(a) and 1.140(b)(7) of the Florida Rules of Civil Procedure because the Plaintiff, HSBC Bank USA, National Association, As Indenture Trustee of the Fieldstone Mortgage Investment Trust, Series 2005-2 is doing business in Florida as an unregistered trust in violation of Florida law. The Plaintiff claims to be acting on behalf of a mortgage trust. The mortgage trust has issued certificates to investors as public securities. It has issued certificates to investors secured by a Florida mortgage. It is not an express trust under the Florida Trust Code. The Trust is a common law declaration of trust under Section 609 of the Florida Statutes. The Trust is an association of two or more persons for the purpose of transacting business in Florida. Section 609.01 of the Florida Statutes. Section 609.02 of the Florida Statutes states:
” 609.02 Filing a declaration of trust.–Every such organization organized for the purpose of transacting business in this state, or organized in this state for the purpose of transacting business elsewhere, which intends to sell or offer for sale any units, shares, contracts, notes, bonds, mortgages, oil or mineral leases or other security of such association shall, prior to transacting any such business, file with the Department of State a true and correct copy of the declaration of trust under which the association proposes to conduct its business, which copy shall be sworn to, as being a true and correct copy, by the chair of the board of trustees named in such declaration of trust. When such copy shall have been filed with the Department of State it shall constitute public notice as to the purposes and manner of the business to be engaged in by such association. The Department of State, prior to the issuance of the certificate by it, shall collect from the said association a filing fee of $350, which fee shall be paid by it into the general fund of the state.”
Section 609.3 of the Florida Statutes states:
” Upon the filing of the copy of the declaration of trust and the payment of the filing fee, in compliance with s. 609.02, the Department of State shall issue to the trustees named in the said declaration of trust a certificate showing that such declaration of trust has been duly filed in its office; whereupon, such association shall be authorized to transact business in this state; provided that all other applicable laws have been complied with”.
Thus, the trust, before offering securities in the form of certificates to investors, was required to file with the Secretary of State a true and correct copy of the Declaration of Trust under which the trust proposes to conduct its business. It does not appear that this has been done. Moreover, the trust has failed to file its declaration of trust, not paid the $350.00 fee and not obtained a certificate from the Department of State and has commenced to transact its business in Florida. Accordingly, the Trust lacks standing to have this motion enforced in the courts of Florida and the persons operating the trust in violation of Chapter 609 have committed a third degree felony under Florida law. Section 609.06 of the Florida Statutes. Arguably if it registered the security with the Securities and Exchange Commission, the trust and its officials are exempted from the requirements of Section 609.05 of the Florida Statutes to obtain a permit to sell securities by the preemption created by Securities and Exchange Commission authorities and other related Federal authorities. However, such an exemption does not exempt the trust from the other requirements of Chapter 609 of the Florida Statutes with which the trust has failed to comply. Florida law requires the filing. Accordingly, Plaintiff lacks standing to seek foreclosure on behalf of a trust doing business in Florida that has not complied with the registration requirements of Florida law. O’Hanlon v. Herndon, 5 So.3d 723 (Fla.App. 2 Dist. 2009). Consequently, Plaintiff, HSBC Bank USA, National Association, As Indenture Trustee Of The Fieldstone Mortgage Investment Trust, Series 2005-2’s Complaint must be dismissed with prejudice.
This Motion to Dismiss filed a year ago in the trial court still has not heard and Plaintiff has failed to respond to this issue. In fact, they have tried to push for summary judgment without a hearing on Defendant’s Motion to Quash Service that was filed with the Motion to Dismiss. I have done more research since my original filing and could provide you more information and my thoughts of the few arguments I have found opposing a Florida Statutes Chapter 609 dismissal , but for now and purposes of getting some info to you I thought I would start with this. Also, I did file with the Court a certified copy from the State of Florida Division of Corporations which reflects that in fact the Fieldstone Mortgage Investment Trust, Series 2005-2 had never registered in Florida as a trust or as any entity despite its foreclosure of hundreds of mortgages in Florida and its sales of securities relating to Florida mortgages/notes. I am curious if you have used Florida Statutes Chapter 609 for a Motion to Dismiss a Foreclosure.
Another thing I have noticed in this case (and very likely in other foreclosure cases) is that the lender on the note and mortgage is Fieldstone Mortgage Company (” FMC”) which was wholly owned by Fieldstone Investment Corp. Fieldstone Mortgage Company is in bankruptcy and Fieldstone Investment Corp was purchased by another entity to save it from filing for bankruptcy. No assignment of Mortgage has been filed in this case and only a non-dated note endorsed in blank was filed after the original Complaint was filed that alleged ” lost note” ““ thus it is going to be interesting to see who will be signing an Assignment of Mortgage and can represent the date the note was endorsed in blank as FMC is in bankruptcy (which only the bankruptcy trustee of Fieldstone Mortgage Company would have authorization to approve an assignment of mortgage or sale of note depending on the date of those actions). Also MERS is the nominee on the Mortgage; however, a search of the MERS system yesterday of my client’s loan reflects MINS Status as Inactive with servicer Chase Home Finance LLC.