Rogers Towers, P.A. welcomes you to its Florida Banking Law Blog! A product of the firm’s Banking and Financial Services Practice Group, the blog will serve as a convenient way for us to share our expertise in banking-related legal issues. We represent banks and other providers of financial services in a broad range of matters throughout the state of Florida. As a result of our significant experience, we will have much to share in the upcoming blog posts and we hope that you will find these posts to be informative and beneficial to you in your respective positions in the industry. We appreciate your interest in the field and in Rogers Towers, P.A., and we look forward to your comments in response to our blog.
In a case that will have a direct impact on creditors, the U.S. Supreme Court has agreed to hear an appeal involving the City of Miami’s claims in three related cases that it suffered damages through alleged discriminatory lending practices of residential mortgage lenders including Bank of America, Wells Fargo, and Citigroup. The Court’s final decision in this appeal will likely define the reach of the Fair Housing Act.
In Bank of America Corp. et al. v. City of Miami, the City of Miami (the “City”) alleged that the banks engaged in a pattern of discriminatory lending in the residential housing market which resulted in the City suffering economic harm. The City brought suit under the Fair Housing Act (the “FHA”) which outlaws discrimination in housing. The FHA, 42 U.S.C. § 3601 et seq., makes it unlawful to refuse to sell or to rent a dwelling to any person, or to refuse to engage in a residential real estate transaction with any individual on the basis of race, color, religion, sex, handicap, familial status or national origin.
Specifically, the City alleged that it incurred money damages from an inordinate number of foreclosures for mortgages on homes in blighted neighborhoods, leading to decreased property values, decreased tax revenues, and an increase in the cost of city services such as police. The City claimed that Bank of America “targeted black and Latino customers in Miami for predatory loans that carried more risk, steeper fees, and higher costs than those offered to identically situated white customers, and created internal incentive structures that encouraged employees to provide these type of loans.”
The Eleventh Circuit overturned the district court’s decision to dismiss the lawsuits, holding that the term “aggrieved person,” as defined in the FHA, encompasses the City’s claim. The ultimate question the Supreme Court must address is who may sue under the Fair Housing Act and for what types of harm. If you recall, we commented last year on the landmark decision Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., in which the Supreme Court embraced a broad interpretation of discrimination claims under the FHA. In that ruling, the Supreme Court held that parties claiming a violation of the FHA need not prove intentional discrimination to prevail so long as a claimant can show that a practice or policy results in a disproportionately negative effect on housing opportunities, the claimant may obtain relief under the FHA.
 City of Miami v. Bank of Am. Corp., 800 F.3d 1262, 1266 (11th Cir. 2015), cert. granted sub nom. Bank of Am. Corp. v. City of Miami, Fla., No. 15-1111, 2016 WL 853246 (U.S. June 28, 2016).
As we have previously discussed, under Florida law, in a foreclosure action, a lender must either provide the original promissory note or, if the note was lost, stolen, or destroyed, follow the statutory procedure for reestablishing a lost note. However, as a recent decision from the Fourth District Court of Appeal highlights, if a note has been modified, it is the original modified promissory note that must be entered into evidence as the operative note.
In Rattigan v. Central Mortgage Company, the bank introduced the original promissory note in connection with its foreclosure action. The original note capped the principal balance owed. However, at trial, the testimony revealed that the loan had been modified, and a modified note had been executed which raised or eliminated the cap. The bank failed to introduce the original modified note into evidence, but, on the basis of trial testimony, obtained a foreclosure judgment for the higher principal balance.
The appellate court reversed the foreclosure judgment, holding that the bank was proceeding under a different note—the modified note—and thus violated the best evidence rule by failing to introduce the original modified note. The court held that testimony regarding the modification should not have been permitted absent the introduction of the modified note itself. Accordingly, the case was remanded for the entry of an involuntary dismissal.
This opinion serves as a reminder to lenders that where a note has been modified, the original modified note, as the operative promissory note, must be introduced or reestablished in order to proceed with foreclosure.
In Florida, a plaintiff seeking to foreclose a mortgage must have “standing” to foreclose the mortgage as of the date it files its foreclosure complaint. That is, if the plaintiff is not the original lender, it must establish that the promissory note and mortgage had been assigned to it prior to or as of the time the lawsuit was filed. Where the complaint fails to demonstrate that a purported assignee has standing to enforce the loan documents, trial courts are directed to dismiss the purported assignee’s complaint. Until recently, no Florida court had addressed whether, after a foreclosure action is dismissed for lack of standing, the same lender may bring a subsequent action based on the same default.
On January 29, 2016, in an appeal handled by Rogers Towers, P.A., the Fifth District Court of Appeal held that the same lender was not barred from bringing a subsequent action after a dismissal for lack of standing. Recognizing that the action presented an issue that did not “appear to have been previously addressed in Florida,” the Fifth DCA cited to decisions from various other jurisdictions explaining that dismissal of a foreclosure action for lack of standing is not an “adjudication on the merits” and had no effect on the underlying duties, rights, or obligations of the parties. Accordingly, even if an assignee fails to establish standing at the time it filed its first foreclosure action, it will not be barred from re-filing its complaint with sufficient evidence of standing.
 E.g., Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013) (“[S]tanding must be established as of the time of filing the foreclosure complaint.”).
 Id. (“A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.”)
 See Tomlinson v. GMAC Mortg., 173 So. 3d 1121, 1123 (Fla. 2d DCA 2015).
 Brown v. M & T Bank, No. 5D15-1397, 2016 WL 347183, at *1 (Fla. 5th DCA Jan. 29, 2016).