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    Property Law Legal Research Blog

    CIVIL PROCEDURE: Effect of Dismissals Without Prejudice in Mortgage Foreclosure Suits

    Posted by Andrea Stokes on Tue, Jul 12, 2016 @ 16:07 PM

    Andrea Stokes, Senior Attorney, National Legal Research Group

         Most practitioners are aware of the potential problems and limitations associated with the use of voluntary dismissal without prejudice. Less well known, perhaps, is the limitation on refiling an action after more than one involuntary dismissal without prejudice, particularly in the mortgage foreclosure context. Florida Rule of Civil Procedure 1.420(b), addressing involuntary dismissals, provides that

    [u]nless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue or for lack of an indispensable party, operates as an adjudication on the merits.

    Fla. R. Civ. P. 1.420(b).

         So it is the odd occasion, indeed, where a trial court involuntarily dismisses without prejudice a second or third time after a motion or sua sponte order under Rule 1.420(b). The question may then arise whether a plaintiff can continue to take "bites at the apple" or if there exists a limitation on those bites. And when viewed in the context of a mortgage foreclosure, this question becomes even more vexing. Beyond the language quoted above, the rule itself provides no further guidance. To ensure that an involuntary dismissal does not operate as an adjudication on the merits, Rule 1.420(b) requires that the order of dismissal expressly state that the dismissal is without prejudice. See id. R. 1.420 author's cmt. ("Dismissals except a voluntary one constitute an adjudication on the merits unless the court provides otherwise.").

          A related and often inextricably intertwined question is whether the applicable limitations period has expired. If so, then it is axiomatic that the complainant has no further avenues by which to refile even with a dismissal without prejudice. The Florida Supreme Court's most oft-cited foray into this issue came in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004). Singleton was most recently discussed by Florida's Third District Court of Appeal ("DCA") after a motion for rehearing en banc in Deutsche Bank Trust Co. Americas v. Beauvais, 188 So. 3d 938 (Fla. 3d DCA 2016).

         In Singleton, the Florida Supreme Court held that "successive foreclosure suits, regardless of whether or not the mortgagee sought to accelerate payments on the note in the first suit," were not barred where the predicate for the second suit was a new default because a "subsequent and separate alleged default create[s] a new default and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action.

    Id. at 941-42 (alteration and emphasis in original) (quoting Singleton, 882 So. 2d at 1008).

         And as Beauvais pointed out,

         Under Singleton, subsequent defaults allow for subsequent accelerations regardless of the nature of a prior dismissal. A lender's right to file a subsequent action to foreclose on an accelerated note following a subsequent default does not turn on whether the first action to foreclose on an earlier default and acceleration was dismissed with or without prejudice. As Singleton teaches, even a dismissal with prejudice which adjudicates the merits of a first filed foreclosure action only precludes the lender from recovering on the underlying defaulted installment and returns the lender and the borrower to the status quo which permits the lender to file subsequent foreclosure actions based on subsequent defaults.

    Id. at 945 (citing Singleton, 882 So. 2d at 1007). Thus, "[a] dismissal without prejudice which does not adjudicate the merits of a first filed foreclosure action, [and] can do no more than terminate a lender's ability to collect on the underlying defaulted installment." Id. (citing Nationstar Mortg., LLC v. Brown, 175 So. 3d 833, 834-35 (Fla. 1st DCA 2015) (applying Singleton)).

          "Thus, as concluded in Bartram, and alluded to in Dorta, the 'with' or 'without prejudice' dismissal is a distinction without a difference." Id. at 946 (citing U.S. Bank v. Bartram, 140 So. 3d 1007, 1013 n.1 (Fla. 5th DCA) ("We acknowledge that the Bank suffered a dismissal with prejudice of its earlier foreclosure action, unlike the dismissal in Dorta, but conclude that the distinction is not material for purposes of the issue at hand."), review granted, 160 So. 3d 892 (Fla. 2014); Dorta v. Wilmington Trust, No. 13-cv-185-Oc-10PRL, 2014 WL 1152917, at *6 n.3 (M.D. Fla. Mar. 24, 2014) (relying on Singleton, 882 So. 2d 1004 ("Singleton involved a dismissal with prejudice; whereas Citibank's foreclosure action was merely dismissed without prejudice. Dismissals without prejudice are not considered adjudications of the merits, and therefore there was no effective acceleration of the Note and the Mortgage." (emphasis added)))); see also s28 Solenenko v. Ga. Notes 18, LLC, 182 So. 3d 876, 877 (Fla. 4th DCA 2016) (same; certifying conflict with Deutsche Bank Trust Co. Americas v. Beauvais, No. 3D14-575, 2014 WL 7156961 (Fla. 3d DCA Dec. 17, 2014), but "declin[ing] to certify an issue of great public importance, as the certification of conflict is sufficient to allow appellants to seek the discretionary review of the Florida Supreme Court").

         In conclusion, the Beauvais court summarized that "[s]imply stated, the holding in Singleton cannot be distinguished away on a with prejudice/without prejudice distinction. Whether voluntarily dismissed or dismissed with or without prejudice the result is the same." 188 So. 3d at 946 (citing Singleton, 882 So. 2d 1004). Accordingly, the only remaining question is whether the refiled mortgage foreclosure action is predicated on the same underlying defaults as the dismissed action was. If so, and the applicable five-year limitations period has run, then regardless of whether the dismissal was with or without prejudice, the complainant is at the end of its road. If not, even if the limitations period for the original defaults sued upon has run, the new action will not be precluded regardless of the number or type of prior dismissals.

    Topics: mortgage foreclosure, civil procedure, Andrea Stokes, dismissal without prejudice, limitations period expired

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