This post details an experience of a Florida foreclosure defense Attorney challenging the big banks to proof their case. Homeowners and “Pro Se” litigants will learn from this experience when implementing strategies to win their foreclosure lawsuits.
Here it goes:
Many people who don’t work in the legal field and/or are unfamiliar with normal court procedures are surprised to see how a lawsuit actually works. It’s not like you see on TV, where a dispute arises and the parties are immediately thrust into a trial. In real life, all litigants have the right to obtain discovery from the other side. This means, in non-lawyer terms, that both sides have the right to require his/her opponent, prior to trial, to provide documents pertinent to the case, to answer interrogatories, and submit to depositions. It’s not like the old TV shows like Matlock, where a cunning lawyer could bring in a surprise witness during trial, win the case, and leave his opponent scratching his head, wondering what happened. Both sides have to disclose their witnesses, indicate what those witnesses are going to testify, and provide pertinent documents, usually long before trial ever begins. The process of obtaining documents from your opponent in a court case, identifying witnesses, and learning what those witnesses will testify is called discovery.
Florida law, like that in most states, has broad discovery rules. Not only must all parties disclose anything relevant to that case, but anything “likely to lead to the discovery of admissible evidence” should also be provided. These broad discovery rules ensure both sides can litigate fairly, preventing a ”trial by sagotage.” In some ways, trials in real life ares like a game of cards, except the participants all have their cards laid on the table, face up.
With this backdrop in place, the interesting question becomes – Do the same rules apply in foreclosure cases? Do homeowners get the same, broad rights to discovery (that every other litigant in every other case enjoys)?
According to the letter of the law, there is no reason to provide homeowners fewer rights in the discovery process than any other litigant. Foreclosure cases are litigated in court (in Florida, anyway), so if homeowners want to ask banks to produce documents, identify witnesses, ascertain what those witnesses will say, answer interrogatories, or submit to depositions, homeowners are perfectly entitled to do so.
In reality, though, it often doesn’t work this way. Banks and their lawyers hate providing discovery in foreclosure cases. They avoid it like the plague. Unfortunately, I’ve witnessed this dynamic many times in foreclosure cases, when bank lawyers respond to my discovery by saying:
You don’t need no stinkin’ discovery, Stopa. I have the original Note, with an endorsement, and that’s all that matters.
Perhaps I’m exaggerating a little, but not much. In my experience, it’s quite common for banks to respond to my discovery requests by saying “we have the Note, we have the mortgage, here is a life of loan history, and a corporate representative will testify at trial. That’s all we’re giving you.”
Obviously, I very much disagree with the banks’ approach in this regard, as I think my clients’ discovery rights are much broader than this. To illustrate, take another look at one of my favorite cases, McLean v. J.P. Morgan Chase Bank, N.A., 37 Fla. L. Weekly D 334 (Fla. 4th DCA 2012). In that case, the Fourth District reversed a summary judgment in favor of a bank because the bank did not prove it had standing at the inception of the case. As the court explained in detail, if a bank is relying on an endorsement to convey standing, it has to prove the endorsement was entered prior to the lawsuit being filed.
If you’ve ever looked at an endorsement on a Note in a mortgage foreclosure case, you know that such endorsements are virtually never dated. It’s just a signature on a piece of paper – no date. As such, it’s essentially impossible for anyone – a homeowner, a judge, or the lawyers for either side – to know when that endorsement was executed. So how is anyone supposed to know whether that endorsement was entered before the lawsuit was filed? In my view, that is a classic example of the type of thing a homeowner can inquire about in discovery. Send the bank an interrogatory and ask when that endorsement was entered. Better yet, send the bank an interrogatory like this:
Interrogatory: The Note you filed in this case on March 23, 2012 contains an endorsement by Mickey Mouse, as Assistant Secretary of Wells Fargo Bank, N.A. Please specify the date of this endorsement as well as the name, address, telephone number, job title, and job description of Mr. Mouse, to include his relationship with Wells Fargo Bank, N.A. on the date of the endorsement.
Of course, this is just one example of the many facts about which homeowners can inquire during the discovery process of a foreclosure case. To illustrate, I had a hearing this week that played out exactly like I described above. I served a Request for Production and First Set of Interrogatories on a bank in a foreclosure case. The bank’s lawyers responded with objections to nearly every request, refusing to disclose much of anything. So I filed a Motion to Compel compliance with these discovery requests. At the hearing, the judge granted that motion, compelling sufficient answers to 17 interrogatories (similar to the one above, but on a broad range of topics, to include forcing the bank to identify all of its witnesses and to provide information about any insurance payments on the subject note/mortgage). In fact, the judge agreed with every one of my requests except for one, finding this interrogatory to be irrelevant:
Interrogatory: Have you ever received any bailout money of any kind from the United States government, either pursuant to TARP or otherwise? If so, please identify the amount of money you received and how and when the money was spent/used/allocated. In your answer, please be sure to disclose the extent to which any such funds were used to provide loans of homeowners in Volusia County, Florida.
My argument for requiring the bank to answer this interrogatory went something like this … Mortgage foreclosure cases are proceedings in equity. A claim for a deficiency is a claim sounding in equity. There is nothing equitable about a bank taking billions of dollars in taxpayer bailout money, including from my clients, which money was intended to avoid foreclosures and provide loan modifications, but for those banks to refuse such modifications. Worse yet, there is nothing equitable about banks getting this bailout, flooding the real estate market with foreclosed properties, driving down property values because of those foreclosures, and then recoup 100% of its alleged deficiency, which it created, despite having been bailed out.
Unfortunately, despite agreeing with me on everything else, the judge did not require an answer to that interrogatory, strongly suggesting (without saying) that he did not agree with the premise of my argument. Respectfully, that’s terribly disappointing. Do you seriously mean to tell me that a bank should get to collect billions in bailout money, not use that money for loan modifications, create a flood of foreclosures in the real estate market, cause prices to drop, create a deficiency, foreclose, collect 100% of the deficiency, and that a homeowner can’t argue “wait, you shouldn’t be able to do this?”
Even if you don’t agree with that argument, I certainly think I should at least be able to argue it. To present evidence to support it (under Florida’s broad discovery rules).
I hope everyone reading this will think long and hard about that issue. Think about the broad discovery rules. Think about how mortgage foreclosure cases are proceedings in equity. Is it really that unreasonable for homeowners to ask, in the face of a lawsuit for foreclosure and a deficiency, “where did all the TARP money go?”
More importantly, if you’re a Florida homeowner, make sure you realize the rights you enjoy during the discovery process. I didn’t win on that interrogatory, but I won on 17 others, and I assure you – forcing the banks to answer such questions will only help as you fight your foreclosure.
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