What Homeowners Must Know After they Have Been Sued in a Bankruptcy Adversary Proceeding

18 Monday Jun 2018

Posted by BNG in Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, Trial Strategies, Your Legal Rights

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adversary proceeding, automatic stay, Bankruptcy, bankruptcy adversary proceeding, bankruptcy court, Foreclosure, foreclosure defense, homeowners, Law, Lawsuit, Mortgage Electronic Registration System, Mortgage loan, Plaintiff, Pro se legal representation in the United States, United States

This post will be helpful to the Debtor when defending against a creditor’s/trustee’s objection to your discharge or the filing of a Complaint for Nondischargeability based upon fraud/conversion; however, this post may also assist the Debtor in bringing an adversary proceeding should one be necessary.

Introduction

An adversary proceeding is a lawsuit brought within your bankruptcy. This lawsuit normally centers around whether a particular debt or all of your debts are dischargeable (or forgiven) through the act of your filing bankruptcy. These lawsuits usually focus around some alleged improper act on your part, including fraud, misrepresentation, or your failure to abide by the Bankruptcy Code and accompanying Rules.

You are now at the point of the adversary process where you have received, by mail or by personal service, the complaint filed by your creditor which asks the Court to decide whether or not that particular obligation should be part of your bankruptcy discharge or an objection to your overall discharge should be granted.

This section of the adversary proceeding packet is to inform you of what your obligations are in order to prepare for a trial. Note that there are references to the bankruptcy rules: Local Rules of Bankruptcy Practice = LR; Federal Rules of Bankruptcy Procedure = Fed.R.Bankr.P. You may also find both types of Rules at the county law library or you may access the Local Rules at the court’s website http://www.uscourts.gov. You should take a look at these rules if you have any questions about the information given in this section.

Step 1: Answer

After you receive a complaint, you must file an answer with the clerk of the Bankruptcy Court within 30 days after issuance of the summons. (Fed.R.Bankr.P. 7012) You must provide a copy of that answer to the creditor’s attorney.

Step 2: Pre-Trial Conference

Note that the cover sheet you receive from the Court will set forth a pre-trial conference date in the lower right-hand corner of the Summons. You must attend that hearing. At that time, the Court will set parameters for trial. The Court may also discuss with the parties whether or not any settlement is possible. Prior to this pre-trial conference with the Court, and within thirty (30) days after you have answered the complaint, you are required to meet with the attorney for the creditor to discuss how discovery will be conducted in the case. After you have had this discussion and no later than fourteen (14) days after the meeting with the attorney, the parties are required to submit a discovery plan. (Fed.R.Bankr.P. 7016 and LR 7016) This plan is a form which the creditor’s counsel will have and will be filled out by both parties. The form will then be submitted to the Court and the Court will then approve, disapprove or modify the discovery plan and enter any other orders that may be appropriate.

Step 3: Discovery

After you have gone through the preparation of the discovery plan and have had it approved by the Court, you will then conduct your discovery. Local Rule 7026 will provide you with information as to what the parties may or may not do during the discovery process. You may also want to look at Local Rules 7026 through and including 7036 and Fed.R.Bankr.P. 7026 through and including 7036 which gives further information regarding some of the discovery tools or requirements.

Step 4: Motions

You may find that throughout the time frame prior to trial that motions are being filed. Motions may be filed by either party. If you are served with a motion in your adversary proceeding, please be advised that you are required to file your opposition or response with the Court and serve your response to the creditor’s attorney not more than fifteen (15) days after you have received the motion and, in no event, not later than five (5) business days prior to the date set for the hearing on the motion. (Fed.R.Bankr.P. 9013 and Local Rule 9014) Make sure that you provide counsel with a copy of your response.

When you get to Court, you are basically going to supplement what is in your opposition or your motion so the Court can make a well-informed analysis of the situation and then deliver an appropriate decision. Please note that when you are in front of the Court, your time is limited. Generally, a motion is limited to approximately five minutes for both sides. It is the feeling of all judges in our district that if all motions and oppositions are well-drafted and timely filed, there is no reason to spend lengthy periods with oral argument. Therefore, you will be expected to come in to court, make a brief presentation and then sit down.

Step 5: Trial

After you have completed all discovery and all motions, you will then be at the point where the parties are ready to proceed with trial. Your trial date will be assigned to you at the pre-trial conference and the Court will generally schedule the trial within 60 and 120 days depending upon the nature of the matter being tried.

Approximately two weeks prior to the trial, you are required to file with the Court a trial statement, a list of witnesses, and a list of exhibits. You must also exchange these documents with the attorney for the creditor. If you and the attorney for the creditor can agree on what the basic issues in trial are going to be, the trial statement may be filed jointly. In other words, one statement will represent the facts and information for both sides to the Court.

The day before the trial, the parties will mark all the exhibits and any supplemental information that needs to be added to the trial statements. Although you are not required to agree with the attorney for the creditor as to what exhibits may be introduced into evidence, it is strongly encouraged that the parties try to agree to all exhibits to be placed before the Court in an effort to have an economical and efficient adjudication of the case.

Certain documents have been included in this packet so that you will have the ability to understand what needs to be filed with the Court prior to trial. However, it is strongly recommended that you access the court’s website at http://www.uscourts.gov and download a copy of the Local Rules. These will prove very useful to you through the course of the adversary proceeding. You may also wish to check with the county law library for a copy of the Local Rules.

All bankruptcy judges are willing to set up a time to discuss whether or not the case may be settled. Many times, having an impartial third party listening to the problems will allow negotiations to flow freely and hopefully obviate the need for the trial. If a settlement conference is set up, it will not be the judge in front of whom this matter will be heard, so you need not fear that you will be prejudiced in any way if this matter is not settled.

COURTROOM ETIQUETTE BETWEEN THE COURT AND THE PARTIES

1. Don’t take the argument personally (no personal slurs against the other party.)

2. Advocacy does not mean we cannot be civil and communicate with the other side.

3. Adversary proceedings are intended to be negotiated if possible.

4. If you cannot resolve the matter and proceed to trial, remember the following:

a. Dress Appropriately- Nice attire such as a suit or slacks is acceptable. Please no hats, shorts, thongs, tank tops, etc.

b. Your statements should be addressed to the court and not to the other side- The only time you should speak to opposing counsel is during breaks or with the Court’s permission after requesting a break.

a. Do not interrupt the other side or the judge when they are speaking.

b. Remember to follow the rules as explained in the attached documents regarding the filing of your trial statement, list of exhibits, witnesses, etc.

DEALING WITH THE LAW

1. Understand your responsibilities and respond accordingly. You are held to the same standard as an attorney when presenting your case and arguing the legal issues. You may need to educate yourself on the law at issue by visiting the law library and reading the Bankruptcy Code and cases dealing with those sections of the code involving your case.

2. Sanctions – Remember that if you act disrespectful to the Court or opposing attorney, or if you lie in your court pleadings or under oath at trial, the Court has the power to sanction you by either assessing a fee or ruling for the opposing party.

3. If you have any questions regarding your responsibilities, call the other side’s attorney they will answer procedural questions, but cannot assist you with your legal argument.

4. Know the Local Rules – you can obtain a copy by accessing the court’s website at http://www.uscourts.gov You may also be able to obtain the rules from the county law library or from opposing counsel.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at https://fightforeclosure.net/foreclosure-defense-package/ “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: https://fightforeclosure.net/foreclosure-defense-package/

What Homeowners Must Know About Mortgage Fraud & Restitution

10 Tuesday Apr 2018

Posted by BNG in Banks and Lenders, Case Laws, Case Study, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Legal Research, Litigation Strategies, Mortgage fraud, Mortgage Laws, Non-Judicial States, Pro Se Litigation, Restitution, State Court, Your Legal Rights

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Foreclosure, homeowners, Law, Lawsuit, Loan, Monetary Restitution, Mortgage fraud, Nevada, Ninth Circuit, Pro se legal representation in the United States, Restitution

During the peak of the housing boom in Las Vegas, Russell, a mortgage loan processor for a large bank, reviewed a mortgage application. Everything appeared to be in order: this particular type of mortgage loan required no income verification because the buyer had excellent credit and the home would be an owner-occupied property. Russell approved the loan for the bank.

Unbeknownst to Russell and the bank, the applicant was actually a “straw buyer,” using his name and credit to buy the house at the insistence of his business partner, but not actually intending to live in the house. All the applicant had to do was sign a few documents and both the applicant and his business partner would profit from exploding housing prices. The applicant’s credit would allow the pair to purchase a single-family residence for $295,000, and then, before the first mortgage payment came due, they would flip the property, that is, immediately sell the home, and profit from the home’s extraordinary short-term appreciation. The applicant never planned on living in the house nor making any mortgage payments, despite his execution of loan documents to the contrary.

Unfortunately, housing prices did not continue their fantastic escalation and the pair were unable to sell the home. Not surprisingly, neither the applicant nor his business partner made any mortgage payments and the home went into foreclosure. At the time of the home’s foreclosure, the house had a fair market value of $265,000. However, the bank that relied on the applicant’s information had too many similarly situated properties at the time of the foreclosure and decided to keep the home in inventory until it could sell the home at a later date.

Meanwhile, the financial institution became suspicious of the applicant and realized he never even moved into the house, despite claiming on his Uniform Residential Loan Application that this would be an “owner-occupied” property.

Concerned with an increase in mortgage fraud, the lender tipped off authorities, who subsequently investigated and arrested the straw buyer and his business partner. Almost a year later, the partners pled guilty and were sentenced, inter alia, to pay restitution to the financial institution. At the time of sentencing, the home had a fair market value of $145,000.

The court ordered restitution based on the Mandatory Victims Restitution Act (MVRA) concerning fraud and property. The victim, in this case the bank, argued its amount of loss equaled $295,000 (the amount originally borrowed) less the current fair market value of the property returned, $145,000; thus, the court should order the defendants to pay restitution of $150,000. On the other hand, the defendants argued that at the time the property was returned to the financial institution, the value of the home was $265,000. And because the bank had control over the property since that point in time, and had the ability to sell it any time, the defendants should not be liable for the further declining
market conditions. Thus, the defendants argued they only owed restitution of $30,000. Alternatively, the judge could consider a third possibility: recent recommendations from US Sentencing Guidelines. Under these new guidelines,
the court determines the fair market value of the home on the defendants’ sentencing
date.

But, if the bank had not sold the home by that date, that fair market value would be based on the county’s assessed value of the property. In Clark County, where Las Vegas is situated, the Assessor’s Office updates property values annually and, depending on the specific time frame in this hypothetical, the assessment value can range from a lagging property assessment valuing the home at $280,000 to a more current assessment valuing the home at $125,000.

Which measure of restitution and subsequent calculation is best? That is, which value most adequately compensates the injured victim without unfairly burdening the defendants? The Ninth Circuit would side with the defendants in this case, having previously held that the value of the home on the date the bank gains control is the proper measure of restitution. Accordingly, the defendants in this case would be ordered to pay only $30,000 in restitution. On the other hand, the Seventh Circuit would hold that the “property” stolen was the money used to finance the home purchase, and not the actual home.

Subsequently, the “property” is not returned to the victim until the bank sells the
house and gets the entire amount it loaned to the defendants back. For that reason, if the bank sold the home by the sentencing date for $145,000, the defendants would be ordered to pay $150,000 in restitution. And if a judge considered the US Sentencing Guidelines, she would look to the local assessor’s office to determine the correct value. Thus, the amount of restitution a defendant pays depends on where the mortgage fraud takes place and whether the presiding judge considers the US Sentencing Guidelines. Accordingly, mortgage fraud restitution is not uniform throughout the United States.

This note discusses the circuit split in applying the Mandatory Victims Restitution Act of 1996 to mortgage fraud crimes—specifically, the difference in the mortgage fraud restitution formula. In Part I, I provide an introduction to mortgage fraud. In Part II, I provide background on the Mandatory Victims Restitution Act of 1996, which established a directive to courts to order restitution to identifiable victims. Further, the Act indicated, albeit imprecisely, that the restitution amount is based on the property’s value on the sentencing date, less the property’s “value” on the date the property is returned. Regrettably, the Act does not provide a definition of the word property,” which has resulted in a circuit split. Three circuit courts calculate the mandatory restitution as the property’s “value” based on the date the property is returned—that is, the property’s fair market value on that date. On the other hand, four circuits insist that the “value” of the property can only be determined when the bank actually sells that property. In Part III, I will discuss the circuit split where courts disagree on the “appropriate” restitution calculation.

In an effort to provide a uniform calculation, last year the US Sentencing Commission proposed changes to the US Sentencing Guidelines. While the Guidelines are only advisory and not mandatory, these recent amendments result in a third possible calculation that I discuss in Part IV.

Finally, in Part V, I critique each of the three imperfect approaches. In addition, I provide comparisons to various state foreclosure deficiency statutes as an illustration of alternative calculations. I conclude by proposing an amendment to the Mandatory Victim Restitution Act that, in the cases of collateralized loans obtained by fraud, defines “property” as the actual property fraudulently obtained: cash. In addition, I propose an additional “good faith” clause to the amendment to prevent banks from holding onto a foreclosed property longer than necessary. The sooner a property is sold, the sooner the bank recuperates some of its lost funds and the sooner a defendant knows the restitution
amount he must pay.

A. What is Mortgage Fraud?

In the hypothetical above, the partners executed mortgage fraud by using the applicant’s name and credit as a “straw buyer.” That is, a person who allows his name to be used in the loan process but has no intention of actually making any mortgage loan payments. Mortgage fraud comes in a variety of forms. For example, a person commits loan origination fraud when he misrepresents or omits information on a loan application upon which an underwriter ultimately relies to write a loan. Mortgage fraud can also occur with illicit programs aimed at current homeowners who are having trouble with their payments. Lately, this type of foreclosure rescue fraud is increasing. These types of scams focus on homeowners on the verge of foreclosure. Criminals promise to “stop or delay the foreclosure process,” and, in return, homeowners sign over their property to the criminals.

Mortgage fraud can also include “flopping.” Flopping occurs when a bank agrees to a short sale with the homeowner who then attempts to get the lowest price possible by purposefully damaging the soon-to-be-sold house. The house is then bought by an accomplice, cleaned up, and immediately flipped for a profit of upwards of 30 percent. In 2011, Nevada ranked second to Florida in the Mortgage Fraud Index (MFI), a ranking of states based on reported fraud and misrepresentation investigations. The FBI investigates mortgage fraud through Suspicious Activity Reports (SARs) filed by financial institutions.

The number of mortgage fraud SARs filed in 2011 was 93,508. To put this in perspective, in 2003 the number of reports filed was less than 7,000. However, mortgage fraud may be decreasing: 2012 SARs are down 25 percent compared to the previous year.

B. Why Does Mortgage Fraud Matter?

Mortgage fraud is a “significant contributor” to our economic crisis. Mortgage fraud has contributed to an increasing number of home foreclosures, decreasing home prices, and tightening of credit because of investor losses attributable to mortgage-backed securities. Further, “[t]he discovery of mortgage fraud via the mortgage industry loan review processes, quality control measures, regulatory and industry referrals, and consumer complaints lags behind economic indicators—often up to two years or more, with the impacts [of the fraud] felt far beyond these years.” Undeniably, reports of mortgage fraud persist and are continually emphasized in the news.

Lenient underwriting standards and a booming housing market have shaped a perfect backdrop for fraud to thrive. However, “[b]y 2007, real estate values began to fall and mortgage lenders began experiencing large losses due to fraud, reducing their ability to fund new mortgage loans.” The economic implications of mortgage fraud are staggering. The actual dollar amount attributed to mortgage fraud is unknown, however in 2010 alone “more than $10 billion in loans originated with fraudulent application data.”

Moreover, in fiscal year 2012, 70,291 SARs were filed with losses of $2.69 billion. And while the number of mortgage fraud instances has decreased, the dollar amounts involved in instances of fraud has increased.

C. Why Restitution?

Until the early 1980s, courts did not habitually consider restitution as part of sentencing guidelines. In fact, if a court ordered restitution, it was usually based on the defendant’s ability to pay. The passage of the Victim and Witness Protection Act (VWPA) in 1982, its subsequent revision in 1986, and later the Mandatory Victims Restitution Act (MVRA) in 1996 empowered federal judges to order restitution to victims of certain crimes without consideration of the defendant’s ability to pay. Unfortunately, victims receive only a fraction of the costs from crimes through restitution, as not all defendants have the resources to pay the restitution and their income potential diminishes significantly once they are in jail. However, as courts consider both the MVRA and the frequently cited public policy argument for restitution (making the victim whole), courts consequently order restitution awards to mortgage fraud victims. Indeed, “[v]ictims in mortgage fraud cases are statutorily entitled to restitution.

D. The Split

When a court convicts a defendant of mortgage fraud, and the defendant’s return of the property alone is not enough to fully restore the identified victim, the court will try to offset this deficiency in one of two ways. The Second, Fifth, and Ninth Circuits determine restitution based on the property’s fair market value the day the victim receives title to the property. The Third, Eighth, Tenth, and, most recently, Seventh Circuits hold the shortage is calculated based on the actual sale of the collateral real estate. Thus, the value of the property is unknown until the property has been sold and the lender receives the net proceeds. Consequently, this split “sets up a potential case for the U.S.
Supreme Court to decide whether the MVRA requires a court to determine restitution based on the fair market value of collateral real estate on the date it is returned to a victim . . . or the cash value upon foreclosure sale.”

II. THE MANDATORY VICTIMS RESTITUTION ACT OF 1996

Congress first enacted legislation in support of victims’ rights with the Victim and Witness Protection Act of 1982 (VWPA). The act included a broad provision for victim restitution. In considering the bill, the Committee on the Judiciary indicated that [t]he principle of restitution is an integral part of virtually every formal system of criminal justice, of every culture and every time. It holds that, whatever else the sanctioning power of society does to punish its wrongdoers, it should also insure that the wrongdoer is required to the degree possible to restore the victim to his or her prior state of well-being.

However, while this report indicated the importance of requiring restitution,
the Act only provided that a Court may order the defendant to pay restitution. Congress expanded and amended legislation for victims in future legislation, most notably in the Mandatory Victims Restitution Act of 1996. Congress identified one of the primary purposes of the Act as “requiring Federal criminal defendants to pay full restitution to the identifiable victims of their crimes.” In addition, Congress specifically made mandatory restitution applicable to fraudulent crimes against property. Moreover, Congress explicitly identified the legislation’s purpose:

This legislation is needed to ensure that the loss to crime victims is recognized, and
that they receive the restitution that they are due. It is also necessary to ensure that
the offender realizes the damage caused by the offense and pays the debt owed to the
victim as well as to society. Finally, this legislation is needed to replace an existing
patchwork of different rules governing orders of restitution under various Federal
criminal statutes with one consistent procedure.

If restitution is appropriate, a court may only award it to identifiable victims. A
federal crime victim is defined as “a person directly and proximately harmed as
a result of the commission of a Federal offense or an offense in the District of Columbia.” Further, restitution is only applicable to crime victims when the
defendant is actually convicted. In addition, “[a] ‘victim’s’ participation in a
fraudulent mortgage scheme . . . will generally exclude the victim from
restitution.”

It should also be remembered that restitution, “like all criminal sanctions . . . is a sanction of limited application.” Restitution is only complete, then, when payment of the obligation is complete. In jurisdictions that allow “extended or nominal payment mechanisms,” which can prolong the repayment, the variable time value of money may cause any restitution to be technically incomplete, even once the balance is repaid in full. Unfortunately, only 17.4 percent of measured property offenses resulted in criminal charges. Where convictions of mortgage fraud do result, however, courts consider the language of the MVRA in awarding restitution:

The court may also order restitution . . . . The order may require that such defendant
. . . return the property to the owner of the property . . . or . . . if return of the property . . . is impossible, impractical, or inadequate, pay an amount equal to the greater of . . . the value of the property on the date of the damage, loss, or destruction, or . . . the value of the property on the date of sentencing, less the value (as of the date the property is returned) of any part of the property that is returned . . . .

Accordingly, when the return of the property is inadequate restitution, the MVRA states that the offset value must be determined as of the date the property is returned. However, the statute is silent as exactly how to measure the value of the property on that date. Consequently, in the absence of clear guidelines, three possible formulas have arisen.

III. THE CIRCUIT SPLIT

With a lack of clarity in defining “property” in the MVRA, the circuit courts have split in their interpretations of restitution. Two circuits have followed the Ninth Circuit in determining that the value of the property is the fair market value on the date of the property’s return, arguing that once the property is returned to the victim, the victim has control over the property and may dispose of the property whenever it chooses. Accordingly, these courts calculate the fair market value of the property based on the date the property is returned rather than waiting for a later sale. Conversely, four circuits hold that the “property” can only be valued when the house is eventually sold and the proceeds are provided to the victim because cash, not real estate, was the actual
property the defendants took from the victim.

A. The Ninth Circuit Method

A bank would say a restitution calculation can only be determined when the property is sold, but a defendant would argue that if a bank holds on to the property in a declining market, it is unfair for the defendant to pay more in restitution than what the property was worth when the victim regained control of it. The Ninth Circuit method considers the fairness of a bank refraining from selling a property immediately, and ultimately agrees with the defendant’s argument.

After the passage of the Victim and Witness Protection Act in 1982, the Ninth Circuit became the first circuit court to consider mortgage fraud restitution. The court turned to an earlier decision in a timber theft case for property valuation guidance. In United States v. Tyler, the defendant was ordered to pay restitution for his theft of timber from a national forest. However, the victim, the federal government, did not sell the timber upon its seizure and in fact purposefully held onto the timber, claiming it needed the timber for evidentiary purposes in its case against Tyler. During the period between the
arrest and sentencing, timber prices declined. The district court found that the
amount of restitution equaled the difference of the timber’s value from sentencing
date and the higher value when defendant actually stole the timber. The Ninth Circuit disagreed with the District Court and held that the defendant should not have an increased restitution when the victim decides to retain the property. The court reasoned that the defendant’s conduct did not cause the subsequent loss the government experienced and therefore restitution was properly calculated as the property’s value on the date the victim regained control of the timber.

The Ninth Circuit subsequently applied this logic to a mortgage fraud context in United States v. Smith, where the defendant obtained loans secured by speculative real estate. The court determined that the credit against restitution should be based on the value of the property on the date title is transferred to the victim. The court noted, “[a]s of that date, the new owner had the power to dispose of the property and receive compensation.” Because the victim has control over the property’s sale once the property is returned, “[v]alue should therefore be measured by what the financial institution would have received in a sale as of that date.”

The Smith decision served as the “keystone for all of the subsequent decisions.”
The Ninth Circuit reinforced this valuation method in later cases. Further, in United States v. Gossi, the court elaborated on its prior decisions that value should be based on the date the victim has control over the property. Specifically, the court noted that what comes with control of the property is the power to dispose, which allows the victim to sell the property anytime and provides no immediate calculation of restitution. Subsequently, the court cited Smith, stating the “[v]alue should therefore be measured by what the financial institution would have received in a sale as of that date.” Finally, this past year, the Ninth Circuit upheld its mortgage fraud restitution calculation in United States v. Yeung. In Yeung, the defendant enlisted five people in a scheme involving false information on straw buyers’ loan applications in order to purchase and refinance homes in Northern California during the booming housing market. The district court considered a sentencing memo indicating that Yeung should pay restitution in the amount of the “outstanding principal balance on the defaulted loans less any money recovered from a sale of the properties used as collateral for the loans.”

Applying the US Sentencing Guidelines, rather than the MVRA, the district court ordered a restitution award in excess of $1.3 million. The Court of Appeals, however,
indicated that a financial institution has control of the property either when the
property is sold or when, citing Smith, the lender “had the power to dispose of
the property and receive compensation,” and therefore restitution should be
based on the fair market value on the date the property is returned. One distinction in Yeung, however, involved a loan purchased on the secondary market. One of the loans had been sold from the originating lender to a loan purchaser at a discount. The court indicated that the “property” in such circumstances is the actual loan, and not the original real property. The court determined that the restitution calculation in this type of circumstance must consider how much the loan purchaser paid for the loan, “less the value of the real property collateral as of the date the victim took control of the collateral property.”

Further, the court disagreed with the district court’s calculation of one property’s value. The district court determined the value of one of the properties as $363,863—the amount the victim received from the property’s sale. However, this sale did not occur until sixteen months after the victim took control of the property. Accordingly, the court found the actual value should be determined from the date the victim took control of the property. Two circuits follow the Ninth Circuit’s restitution calculation. In both United States v. Reese and United States v. Holley, the Fifth Circuit maintained that a property’s value is determined based on the date the collateral property is returned to the lender. Further, in Holley, the Fifth Circuit specifically analogized the facts of Holley to the Smith case in subscribing to the Ninth Circuit calculation

Relatedly, in United States v. Boccagna, the Second Circuit performed an extensive analysis of how property value should be measured, ultimately agreeing with the Ninth and Fifth Circuits. The Boccagna court noted that the MVRA does not define how to determine the value of property. Instead, the court stated, the “law appears to contemplate the exercise of discretion by sentencing courts in determining the measure of value appropriate to restitution calculation in a given case.” The court found the property’s sale price was lower than the fair market value and remanded the case to determine this value as part of the restitution calculation.

B. The Seventh Circuit Method

In contrast, four circuit courts presume the fair market value is determined only by the actual sale of the property. I have referred to this calculation as the Seventh Circuit method because of that court’s recent decision in which it analyzed all circuit holdings to date. However, these decisions begin outside of that circuit. The Third Circuit, in United States v. Himler, observed that the return of the property would be inadequate to compensate the victim, and explicitly disagreed with the Ninth Circuit’s view that value of the property is “as of the date the victim took control of [it].” The court noted instead that real estate is an illiquid asset, and “is only worth what you can get for it.” Thus, the court held that restitution would equal the original loan amount, less the eventual amount recovered from a sale. Surprisingly in this case, waiting until the sale actually
occurred resulted in the defendant paying less restitution than he would have if the fair market value had been used. The condominium in Himler sold for significantly more than its presumed value when title was transferred, due to favorable market conditions.

The Tenth Circuit, in United States v. James, also concluded that value is based on the actual foreclosure sales price and not an appraised value when the property is returned to the mortgage holder. The court noted that the MVRA “generally uses the term ‘value,’ and does not limit calculation of ‘value’ only to the use of the ‘fair market value’ of the property at issue.” Further, because the statute does not specifically mention value as being fair market value, there are other examples of value that may be appropriate, such as foreclosure sales price and replacement price. The court subsequently noted that
value can be a flexible concept, and a court with discretionary powers should keep in mind the purpose of restitution—to make the victim whole. The court concluded, therefore, that the foreclosure sale price in that case reflected a more accurate measure of the victim’s loss. Similarly, the Eighth Circuit, in United States v. Statman, used the foreclosure sale price of a fraudulently purchased bakery business in calculating the restitution award to a state’s small business-funding agency. While the defendant wanted the court to consider the appraised value of the bakery, the court cited James and determined that a foreclosure sale price was a permissible calculation method. The court also agreed with the Tenth Circuit; its decision aligns with the public policy concerns, which justify the existence of restitution in the first place—the need to make victims whole for the actual loss. While this case involved financial fraud, and not mortgage fraud per se, the chosen calculation method aligns this circuit with the sale-price camp.

Most recently, in United States v. Robers, the Seventh Circuit joined the Third, Eighth, and Tenth Circuits concluding “it is proper to determine the offset value [of property that is returned] based on the eventual amount recouped by the victim following sale of the collateral real estate.” The court observed that because the victim loaned cash to the defendants to purchase the property, the cash was therefore the “property” taken, not a home. Basing its opinion on the plain language of the MVRA, the Seventh Circuit decided that “ ‘property’ must mean the property originally taken from the victim,” the value can only be determined by the amount of cash returned to the victim from a sale.

IV. YET ANOTHER PERSPECTIVE—US SENTENCING GUIDELINES

The US Sentencing Guidelines are advisory rules that set out uniform sentencing guidelines for various offenses. The Guidelines are not mandatory,
and while judges have discretion in sentencing, courts must consider the Guidelines
in determining a defendant’s sentence. Moreover, a court of appeals reviewing a sentence that follows the Guidelines will consider the sentencing reasonable per se. Under these Guidelines, the factors considered when imposing a sentence include restitution to the victim. Further, the Guidelines state that, “[i]n the case of an identifiable victim, the court shall . . . enter a restitution order for the full amount of the victim’s loss, if such order is authorized under 18 U.S.C. . . . § 3663.”

The US Sentencing Commission annually reviews the current Guidelines and proposes amendments to reflect inadequacies in recent sentences. Recent revisions to the Guidelines, however, are not consistent with the latest Seventh Circuit decision in Robers. In the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress issued a directive to the US Sentencing Guideline Commission to review and amend federal sentencing guidelines related to “persons convicted of fraud offenses relating to financial institutions or federally related mortgage loans and any other similar provisions of law.” The amendment subsequently attempts to address the inconsistencies with Application Note 3(E) and “credits against loss rule,” which offsets a victim’s
loss by any credit the victim has already received. In general, the rule deducts the fair market value of the property returned to the victim from the amount of restitution the defendant is required to pay. In other words, the restitution is offset by the collateral’s fair market value. The Commission specifically addressed the situation that the circuit courts have wrestled with—when the victim gets the collateral back but has not disposed of the property, resulting in a problematic value calculation. The Commission noted this and, in an attempt to provide uniform guidelines, it proposed two changes. The first change established a specific date of the fair. market value determination: “the date on which the guilt of the defendant has been established.” The second change “establishes a rebuttable presumption that the most recent tax assessment value of the collateral is a reasonable estimate of the fair market value.” The Commission suggests that a court may consider the accuracy of this measure by examining factors such as how current the assessment is and the jurisdiction’s calculation process. In sum, a court ordering restitution following these Guidelines would establish the value of the property based on the official date of the defendant’s guilt. In addition, if the property has been returned to the victim but remains unsold, a court will use the local tax assessor’s value of the property to determine the property’s value.

V. CRITIQUE OF THE THREE CALCULATIONS

The absence of a definition for the term “property” in the MVRA is the root of the different applications of the statute throughout the country. “When the court defines ‘property,’ the question is whether the statute refers to the property stolen or the property returned. They are not necessarily equivalent, particularly in the context of complex financial instruments . . . .” However, as stated previously, the Act’s purpose is to make the victim whole, and no matter which formula is used, each calculation has the potential to not achieve this goal.

A. The Ninth Circuit Method: Control as the Impetus

There are several advantages to the Ninth Circuit mortgage fraud restitution calculation method, which holds that the fair market value should be calculated based on the date the property is returned to the financial institution victim. First, the date reflects the date that control over the property has been returned to the victims. Accordingly, the bank then has the power to dispose of the property at its discretion without additionally penalizing the defendant if the victim refrains from selling the property on that date. For example, a victim may decide to hold on to the property, as in United States v. Tyler or United States v. Smith, coincidental with a declining market. A victim may have too
many properties in inventory to immediately put a particular property up for sale. Or a victim may be making a calculated business decision to retain the property for a certain period of time for accounting purposes. No matter the purpose behind the retention, it is unfair to place the additional penalty that coincides with declining real estate prices on the defendant who had no control or even influence over the property’s sale.

Second, this specific date requires no guesswork when attempting to calculate the amount of restitution, which results in better efficiency. On the date the bank gets the property back, an appraisal can determine the property’s fair market value. The court can immediately calculate the restitution amount with this figure. Waiting until the property actually sells could result in a delay of months or years to determine how much the actual proceeds from the sale are. As a result, the court has an almost immediate figure to apply to the calculation and can order the restitution award right away. On the other hand, the Ninth Circuit calculation method has some considerable weaknesses. First, real estate is an illiquid asset, and determining fair market value of an illiquid asset is difficult. An appraisal only suggests what the house could sell for, not what the house actually will sell for. In addition, appraisals are based on historical data of home sales, and during sharp market increases or decreases an appraisal will not reflect the most up-to-date real estate prices.

Second, the recent housing bubble created an economic environment where home prices decreased at a radical rate. Traditionally, such sharp declines are not a concern with real estate over the long run because, while real estate prices fluctuate, they eventually trend upward. However, in situations like the recent drops in home values, the victim-lender can be punished for the market decline, despite the fact the victim was actively trying to sell the property. In addition, amidst tightening credit conditions, fewer buyers may qualify to purchase a home. This results in too much supply, not enough demand, and
consequently puts further downward pressure on home prices. The victimlender
is therefore penalized for market conditions beyond its control and consequently
does not receive complete restitution. Further, a victim financial institution is not in the business of selling homes; it is in the business of making collateralized mortgage loans for qualified buyers. Not only will the lender have costs associated with selling the
home (for example, carrying costs or realtor commissions), the lender cannot make a sale magically happen, especially if the home is situated in a market flooded with other foreclosure sales. Thus, when the lender eventually sells the home, it can potentially face a greater loss, an inequity beyond its control.

B. The Seventh Circuit Method: Cash Proceeds are the “Property”

As discussed in Part II, the Seventh Circuit, along with three other circuits, requires a sale of the property in order to establish the net proceeds offsetting a restitution award. These circuits distinguish that the property fraudulently obtained was the cash proceeds to finance a real estate purchase, not the actual home. Thus, this method recognizes the illiquidity of real estate and instead requires cash proceeds from a property’s sale; therefore, no return of the property for restitution purposes occurs with just the transfer of title or “control” over the property.

In addition, this method provides a more exact amount to the restitution calculation. With an appraisal, a court only has an approximation of what the house is worth. With an actual sale, the court knows specifically what the home sold for, and also has information on the true net proceeds to the lender.

Finally, this method also provides a buffer of protection for a victim trying to sell a property in a declining housing market. If the victim is unable to sell the property immediately, and home prices continue to plummet, the victim will not be financially punished by an ensuing lower sales price of the property. Thus, by treating the property as cash proceeds and not calculating the restitution award until there is a sale of the property, this allows the victim to come closer to achieving full restitution because the funds returned are the original amount that was taken.

This calculation method, however, has some distinct disadvantages. First, calculating the amount of time a home will be on the market is a challenge. For example, in a downturn economy, is it appropriate for the defendants to wait for the home to sell for months or years? At what point should the restitution award sentence be official? Without an established time period for a requisite sale, there will be a decrease of both efficiency and certainty as the defendant will have to wait longer to find out what the value of the property is and therefore how much restitution is necessary. In addition, what if the lender purposely holds on to the property longer than necessary? Indeed, victim banks could make a “business decision” to hold onto a property for years before attempting to sell. This type of allowance does not encourage an efficient method of asset redistribution, which can delay economic recovery in a down economy. Further, what if the victim holds an improper foreclosure auction—for example, by failing to advertise the foreclosure sale—and subsequently purchases the home itself for an amount far lower than fair market value because of a (not surprising) lack of buyers? Should the
lender be rewarded for its misbehavior? On the other hand, some would argue
that between the two parties—a convicted criminal who attempted to defraud a
financial institution and a more innocent lender who trusted the criminal borrower—
the defendant should absorb the risk.

Further, it is possible in a booming housing market that a defendant will owe no restitution. For example, if the defendant fraudulently obtained a home loan for $200,000 and the victim lender subsequently sold the property for $205,000, the defendant will be absolved from restitution. However, if part of the goal of restitution is to make the victim whole, the victim is more than compensated in a booming housing market.

Moreover, this type of calculation can have an adverse effect on other types of property. Knowing that the value of the property is not calculated until the item is actually sold, a criminal has little incentive to actually return the property. This would not be a concern for real property, but the same legal framework could be applied to other forms of collateral that can be moved and hidden, like cars. Thus, a thief can choose to hold on to the property or never return the property because of a lack of incentive to return it immediately. Accordingly, “[t]he decision is focused on the statute’s goal of making victims whole but potentially interferes with the statute’s goal of returning property to
victims.” Consequently, “[i]f a defendant is going to be on the hook for the offset amount regardless of when the property is sold, then why return the property? Also, the decision may have the unintended consequence of interfering with the marketplace . . . .”

Finally, the loan in question in these circumstances is for a collateralized asset. The actual home provided security to the lender. As such, the lender bore the risk when it made the loan; however, the lender also understood it could foreclose on the home in case of default. Thus, this cost of doing business is already accounted for and a victim lender understands this type of risk when providing mortgage loans.

C. US Sentencing Guidelines: Local Property Assessment is the Real
“Value”

As discussed in Part IV, the US Sentencing Guidelines establish the date of valuation as the conviction date of the defendant. In addition, if the property has not sold by that date, the local property tax assessor’s value of the home is the value of the property for restitution calculation purposes. There are several advantages to this approach. First, if every circuit applied this approach, these guidelines would result in a uniform application throughout the country and would eliminate the conflicting restitution awards. In addition, this approach sets a number that can be calculated and independently verified. An individual could easily confirm the tax assessor’s value of the property and calculate the restitution.

Moreover, the Guidelines allow flexibility. For example, if a court determines that an assessed value is too divergent from a property’s fair market value, the court has discretion to address these differences and assign a fair market value.

The Guideline method, however, has potential disadvantages. First, as previously
noted, the assessed value may not be near the fair market value of the property, and a battle of experts may ensue as both the defendant and the victim claim otherwise. In addition, this discrepancy may afford too much discretion to judges when the goal of the Guidelines is to set a uniform policy.

In addition, this approach disregards the Seventh Circuit method recognizing that the property taken was the actual cash for the home loan. Instead, by relying on a tax assessor’s value if the home remains unsold, the Commission determined that the “property” is the tangible real estate, and not the cash that was lent. Again, if the victim were unable to sell the home in a declining housing market, the restitution award would fail to compensate the victim for its true loss.

D. Alternative Methods of Calculation – State Deficiency Statutes

The problematic issue of fair market assessment is not unique to restitution.
Every state and the District of Columbia have a deficiency statute, whereby a lender can obtain a deficiency judgment to recover the difference between a foreclosure sale price and the current outstanding balance owed on the mortgage loan. Not every jurisdiction, however, calculates this deficiency in the same way. For example, Nevada calculates the home value based on the actual sale price, not the fair market value when the property is returned to the lender. However, the court may also consider the home’s appraised
value in its determination.

Some states maintain that a foreclosure sale price determines the value of the home when calculating a deficiency judgment. In other words, these states determine that a property’s value is only determined at the time of the property’s sale. Therefore, this calculation is similar to the Seventh Circuit method whereby a property’s value can only be determined following a sale of the real estate.

Other states consider the fair market value of the property when considering a deficiency judgment. States that consider the fair market value at the time the property is returned coincide with the Ninth Circuit calculation method. Notably, some of these states are states that have had a high number of foreclosures and are within the Ninth Circuit: for example, Arizona and California. Other states provide that the courts have discretion to determine the appropriate value of the property. This discretion is analogous to the alternative offered by US Sentencing Guidelines. This alternative is available when a court deems the property’s assessed value is inappropriate and provides that a court has authority to consider other evidence in its determination of a property’s value.

Thus, just as there is a lack of uniformity in the restitution calculation depending on which state you live in, there is a corresponding lack of uniformity regarding deficiency judgments. While most states follow the foreclosure sale approach recognizing the property’s value can only be determined with an actual sale, this approach does not account for the amount of time a financial institution can choose to hold onto the property. It further fails to account for the lack of control a mortgagor has over the sale process. On the other hand, while the fair market approach recognizes the importance of the control aspect, this approach does not consider a mortgagee’s potential inability to sell in a down economy.

E. Analysis

Restitution is founded primarily on the idea that the victim should be made whole for his property loss. The actual property that was defrauded from a victim in mortgage fraud is the money lent as part of the real estate transaction.
Therefore, until the actual money is returned, equity has not been restored to the victim. However, equity also demands that a victim not take advantage of the criminal defendant and hold on to the returned real estate property longer than necessary to sell the real estate property. Therefore, there should be a limitation to ensure a victim does not unreasonably allow the property to languish. Accordingly, a “good faith” requirement should be included in any amendment to the MVRA, requiring a victim to sell the property to recoup funds with good faith. Thus, a defendant who believes a victim unfairly held onto a property for too long may petition the court to reduce the amount of restitution owed if the victim did not commence the sales process with good
faith.

If Congress were to amend MVRA, it should provide a definition of the term “property” to help distinguish between properties at the different phases of a financial transaction. Because of the diverse types of financial fraud—e.g. mortgage fraud compared with securities fraud—the term “property” may have more than one meaning within these contexts, and may also change throughout the transaction. For instance, consider a scheming debtor who fraudulently obtained a margin loan to purchase both mortgage backed securities and corporate bonds. The property “stolen” initially in this case is the fraudulently obtained cash used to purchase the assets. However, after the margin loan is received, the property now consists of two types of financial instruments within
the debtor’s portfolio. Indeed, the property in its current form (financial assets)
can be converted back to the form of the original property (cash). However, with the current definition of property, it is unclear if that conversion is even required.

The definition of property should state that “property” is defined as the specific or particular type of asset (such as cash) that the defendant secured from the victim. This way, the “property” returned to the victim (money) will be the same type of property stolen (money used to purchase the home). In addition, similar to many state statutes prohibiting insurance companies from operating in bad faith, the Act should prohibit victim-lenders from operating in bad faith.

VI. CONCLUSION

Defendants, like the partners in the fictional story in the introduction, could face varied restitution awards depending on which state they commit the mortgage fraud in. This lack of a uniform approach results in inadequate restitution to victims. If the goal of the MVRA is to make victims whole, a more standardized and consistent calculation of restitution is required. Providing a definition of property in the MVRA would provide this uniformity. Further, requiring victims to act in good faith as they attempt to convert property back to the type of asset they were deprived of will help ensure defendants aren’t unfairly punished.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

How Homeowners Can use “Produce the Note” in Judicial & Non-judicial Foreclosure States

24 Wednesday Jan 2018

Posted by BNG in Banks and Lenders, Fed, Federal Court, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Mortgage mediation, Non-Judicial States, Note - Deed of Trust - Mortgage, Pro Se Litigation, State Court, Your Legal Rights

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In some states, a lender can foreclose on your home without going to court. These are called non-judicial foreclosure states. You can still use the “Produce the Note” strategy in these states, but it takes a few more steps on your part.

First, the concept behind “Produce the Note” is this: When a homeowner is faced with a foreclosure suit, “Produce the Note” requires the lender to prove it has the actual authority to foreclose, by requiring it to officially produce the original promissory note in the lawsuit. But if there is no foreclosure lawsuit, what can homeowners do? In these “nonjudicial foreclosure” states, such as California, Texas, or the thirty or more other states with similar procedures, the homeowner has to file a lawsuit against the party trying to foreclose.

Here’s how it generally works:

In a state with nonjudicial foreclosure procedures, a foreclosure sale can be initiated by the lender without using court proceedings.
Homeowners receive a “Notice of Intent” letter informing them that a foreclosure sale will be scheduled unless the overdue debt is paid within a certain amount of time.
If the debt is not paid accordingly, a “Notice of Sale” is then sent informing the homeowner that a foreclosure sale will take place at a particular time and place.
No lawsuit is ever initiated by the lender and the courts are not involved.

Without a lawsuit, you cannot use judicial procedures to require the lender to “produce the note.”
Merely sending a private letter to the lender “demanding” that it produce the original note to the borrower may be met with utter disregard or outright refusal by the lender.

So, here’s what you can do:
In a nonjudicial foreclosure state, in order to protect yourself by demanding that the lender “produce the note,” it will be necessary for you to first actually file your own lawsuit. Even in such nonjudicial foreclosure states, no law prohibits you from instituting your own lawsuit challenging the right of a lender to foreclose on your property. The lawsuit would allege that:
the lender has sent a Notice of Intent to Foreclose; the homeowner is unsure as to whether the lender still possesses the original debt instrument, upon which the lender claims the right to foreclose; the homeowner wants proof of such authority; and the court should intervene and prevent the foreclosure from taking place unless and until such proof is presented.
Initiating litigation to protect your rights is never a simple process. Requirements as to what must be contained in a pleading, how the facts must be plead, who should be named in the pleading, and how the pleading should be officially “served” on the lender, all differ from state to state.

Once a lawsuit is initiated, however, all states have judicial procedures that allow a party to require the other side to produce relevant documents, and the “produce the note” strategy can be used.

Often times, the best way to protect your rights in these situations is to seek professional help from an attorney licensed to practice in your geographical area. Getting involved in a lawsuit by representing yourself, especially if you file the lawsuit yourself, is not easy, but you can do it. Every citizen is able to represent themselves and file a lawsuit on their own. It’s called pro se, which means “on ones own behalf.”

If you can afford a lawyer, then by all means, hire one. There are attorneys who specialize in real estate matters, and either advertise or can be found in the yellow pages. Most areas have bar associations that maintain lists of attorneys willing to help in specific areas of the law.
Finally, there are usually “legal aid” organizations around set up to assist individuals who may have difficulty paying for the services of an attorney. A good place to begin your search is by going to the Legal Services Corporation website.

So, even if you are in a non-judicial foreclosure state, you can use “Produce the Note.” This is your home, and if you want to fight for it, you do have a way.

If your home is currently in foreclosure, there may still be a chance to save it. As a result of lenders buying and selling mortgages your note could have changed hands several times over the course of the loan. But where is the actual note? In some warehouse somewhere? Make ‘em prove they own the debt they say you owe.

WHO OWNS THE NOTE?
Your goal is to make certain the institution suing you is, in fact, the owner of the note (see steps to follow below). There is only one original note for your mortgage that has your signature on it. This is the document that proves you owe the debt.
During the lending boom, most mortgages were flipped and sold to another lender or servicer or sliced up and sold to investors as securitized packages on Wall Street. In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. This is the key to the produce the note strategy. Now, many lenders are moving to foreclose on homeowners, resulting in part from problems they created, and don’t have the proper paperwork to prove they have a right to foreclose.

THE HARM
If you don’t challenge your lender, the court will simply allow the foreclosure to proceed. It’s important to hold lenders accountable for their carelessness. This is the biggest asset in your life. It’s just a piece of paper to them, and one they likely either lost or destroyed.

When you get a copy of the foreclosure suit, many lenders now automatically include a count to re-establish the note. It often reads like this: “…the Mortgage note has either been lost or destroyed and the Plaintiff is unable to state the manner in which this occurred.” In other words, they are admitting they don’t have the note that proves they have a right to foreclose.
If the lender is allowed to proceed without that proof, there is a possibility another institution, which may have bought your note along the way, will also try to collect the same debt from you again.

A Tennessee borrower recently had precisely that happen to her. Her lender, Ameriquest, foreclosed on her in July of 2007. About three months later, another bank sent her a default notice for the mortgage on the house she just lost. She called to find out what was going on. After being transferred from place to place and left on hold for lengthy periods of time, no one could explain what happened. They said they would get back to her, but never did. Now, she faces the risk of having her credit continually damaged for a debt she no longer owes.

FIGHT FOR FAIRNESS
This process is not intended to help you get your house for free. The primary goal is to delay the foreclosure and put pressure on the lender to negotiate. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers know that’s not the reality.

Too many homeowners have experienced lender resistance to their efforts to work out a payment structure to keep them in their homes. Many lenders bear responsibility for these defaults, because they put borrowers into unfair loans using deceptive, hard-sell practices and then made the problem worse with predatory servicing.
Most homeowners just want these lenders to give them reasonable terms on their mortgages, many of which were predatory to begin with. With the help of judges who see through these predatory practices, lenders will feel the pressure to work with borrowers to keep them in their homes. Don’t forget lenders made incredible amounts of money by using irresponsible practices to issue and service these loans. That greed led to the foreclosure crisis we’re in today. Allowing lenders to continue foreclosing on home after home, destroying our neighborhoods and our economy hurts us all. So, make it hard for your lender to take your home. Make ‘em produce the note!

STEPS TO FOLLOW – You can either write Qualified Written Request RESPA Letter (QWR), to your lender. Alternatively, you can use the fill in the blank request forms usually available in your local Circuit Courts:

A. If your lender has already filed suit to foreclose on your home:

Use the first form. It’s a fill-in-the-blank legal request to your lender asking that the original note be produced, before it can proceed with the foreclosure. In some jurisdictions, the courts require the original request to be filed with the clerk of court and a copy of the request to be sent to the attorney representing the lender. To find out the rules where you live, call the Clerk of Court in your jurisdiction.

If the lender’s attorney does not respond within 30 days, file a motion to compel with the court and request that the court set a hearing on your motion. That, in effect, asks the judge to order the lender to produce the documents.

The judge will issue a ruling at your hearing. Many judges around the country are becoming more sympathetic to homeowners, because of the prevalence of predatory lending and servicing. In the past, many lenders have relied upon using lost note affidavits, but in many cases, that’s no longer enough to satisfy the judge. They are holding the lender to the letter of the law, requiring them to produce evidence that they are the true owners of the note. For example:

In October 2007, Ohio Federal Court Judge Christopher Boyko dismissed 14 foreclosure cases brought by investors, ruling they failed to prove they owned the properties they were trying to seize.

B. If you are in default, but your lender has not yet filed suit against you:

Use the second form. It’s a fill-in-the-blank letter to your lender which also requests they produce the original note, before taking foreclosure action against you.
If the lender does not respond and files suit against you to foreclose, follow the steps above.
UPDATE: CNN features The Consumer Warning Network and the “Produce The Note” strategy. Borrowers are putting this plan into action and getting results!

Consumer Warning Network Featured on CNN

Borrower wins more time to fight foreclosure! At a court hearing sometime ago, a Pinellas County, Florida Judge denied Wachovia the right to proceed with its foreclosure against borrower Jacqueline O’Brien (profiled in the CNN story). Instead, O’Brien was granted a continuance, as she pursues the produce the note strategy. Wachovia expressed interest in renegotiating the terms of the loan, rather than continuing the court battle.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

What Homeowners Should Know About Appeals at the 9th Circuit

28 Monday Nov 2016

Posted by BNG in Appeal, Bankruptcy, Fed, Federal Court, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Landlord and Tenant, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, Trial Strategies, Your Legal Rights

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The Ninth Circuit uses a limited en banc system for en banc matters because of its size, with 11 judges comprising an en banc panel;

The Chief Judge is always one of the 11 en banc judges;

The Ninth Circuit currently has 29 active judges and 15 judges on senior status;

Active judges are expected to hear 32 days of oral arguments per year;

Judges are assigned to hear cases by rotation, and no preference is given for judges from those jurisdictions;

Oral argument are scheduled on certain dates;

Filings for are currently down 3% compared to last year;

Pro Se filings account for 51% of the documents filed with the court;

The largest category of pro se litigants are prisoners;

48% of all immigration appeals in the US are filed in the Ninth Circuit;

From the entry of the final order of the lower court or agency to final Ninth Circuit disposition: 32.6 months
From the filing of the law brief to oral argument or submission on briefs: 8.7 months in the Ninth Circuit (4.1 months nationally);

The court is permitted to move cases up in priority;

Priority is set by a staff attorney who assigns a number to each case based on a point system: 1, 2, 3, 5, 7, 10, and 24. Cases assigned 1 or 2 go to the screening panel for disposition. Cases assigned 24 always get oral argument, and involve matters like the death penalty. Cases assigned 3, 5, 7, or 10, will depend on the number of parties, the types of issues, etc. These cases may get oral argument, or be submitted on briefs;

The assignment of the panel of judges is separate from assignment of cases;

Panels are set 1 year in advance;

The clerk’s office assigns cases based on a formula that includes priority 99% of petitions for rehearing en banc are rejected – a judge on the court must initiate the process for en banc rehearing, and a judge may do so even if there is no petition for rehearing en banc filed;

If there is a second appeal to the court in the same case, the case is first presented to the original panel to see if they want to decide the second appeal – usually the panel will take back the case in approximately 1/4 to 1/3 of cases – if you want the same panel, file a motion to ask to have the case assigned to the same panel, but give good reasons why;

Generally, most general civil appeals where the parties are represented by attorneys will get set for oral argument – but about 20-25% that are assigned to oral argument will ultimately be submitted on briefs instead.

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

What 5th Circuit Homeowners Must Know About Stay Injunction During Appeal Procedings

03 Sunday Apr 2016

Posted by BNG in Foreclosure Defense, Judicial States, Non-Judicial States, Pleadings, State Court, Your Legal Rights

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If a party pursuing a collateral order appeal wants a stay of the trial court proceeding pending resolution of the attempted appeal, it must move for such order. Federal Rule of Appellate Procedure 8 governs motions for stay or injunctions while an appeal is pending. FED. R. APP. P. 8(a)(1)(C).

Rule 8 provides that a party must ordinarily move first in the district court for a stay of the order of a district court pending appeal or for an “order suspending, modifying, restoring, or granting an injunction” while an appeal is pending. FED. R. APP. P. 8(a)(1)(A), (C).

1. Contents and requirements of Motion for Stay filed in the Fifth Circuit

A party may bypass the district court and move for that relief in the court of appeals in the first instance by filing a motion showing that “moving first in the district court would be impracticable.” FED. R. APP. P. 8(a)(2)(A)(i).
If a party unsuccessfully sought a stay from the trial court, that party may seek a stay from the court of appeals by filing a motion stating that “a motion having been made, the district court denied the motion or failed to afford the relief requested and state any reasons given by the district court for its action.” FED. R. APP. P. 8(a)(2)(A)(ii).
Under either scenario—whether a stay was or was not sought in the district court in the first instance—any motion for stay in the court of appeals must also include:

(i) the reasons for granting the relief requested
and the facts relied on;
(ii) originals or copies of affidavits or other
sworn statements supporting facts subject to
dispute; and
(iii) relevant parts of the record.

FED. R. APP. P. 8(a)(2)(B); see also FED. R. APP. P. 18(a)(2)(B) (governing stays pending review of agency decision or order).
The Federal Rules of Appellate Procedure also require that the moving party give reasonable notice of the motion to all parties, including when, where, and to whom the application for stay or injunction is to be presented. FED. R. APP. P. 8(a)(2)(C). An original and three copies of the motion and supporting papers, together with a certificate of service, should be filed with the circuit clerk of the court of appeals. The motion does not need a cover, but must be securely bound so as to not obscure the text and so that it will lie reasonably flat when open.
There is no separate filing fee for filing a motion for stay or injunction in the court of appeals, but all required fees must have been paid in the underlying action before the court of appeals will act on the motion. Counsel should generally consult FED. R. APP. P. 27(a) and (d), 5TH CIR. R. 27.4, and the Internal Operating Procedure following 5TH CIR. R. 27.5 (which was effective December 1, 2002) concerning the requirements and format for motions. In particular, counsel should note that all motions should indicate whether they are opposed or not.
And, because a motion for stay or injunction is not merely a “procedural motion,” it must contain a certificate of interested persons. See 5TH CIR. R. 27.4.

The Fifth Circuit Internal Operating Procedures now clarify a gap in that existed in the rules until a few years ago regarding the lack of a regulation of the font size for motions. The Internal Operating Procedure following 5TH CIR. R. 27.5 makes clear that motions must comply with the typeface and type style requirements of FED. R. APP. P. 32(a)(5) and (6), which means that motions must be in no smaller than 14 point proportional typeface (or not more than 10½ characters per inch in monospaced typeface). The length of motions is limited to 20 pages, exclusive of the corporate disclosure statement (in the Fifth Circuit, the certificate of interested persons) and any accompanying documents authorized by Rule
27(a)(2)(B) and, in the specific context of a motion for stay or injunction, by Rule 8(a)(2)(B). FED. R. APP. P. 27(d)(2).

2. Response to Motion for Stay

Federal Rule of Appellate Procedure 8 governing motions for stay is silent concerning responses and replies. The general rule concerning motions provides that any party may file a response in opposition to a motion “within 10 days after service of the motion unless the court shortens or extends the time.” FED. R. APP. P. 27(a)(3)(A). In computing your response time, counsel should note that the computation-of-time rule in the Federal Rules of Appellate Procedure was recently amended (effective December 1 , 2013) and now provides that if the time for taking an action under the Federal Rules of Appellate Procedure is less than 11 days, then intervening Saturdays, Sundays, and legal holidays are excluded, unless the time period specifies that it is stated in calendar days. FED. R. APP. P. 26(a)(2).
Because the court may act on motions authorized by Rule 8 (for stay or injunction) in fewer than 10 days by giving reasonable notice that it intends to act sooner, if a party intends to respond to a motion for stay or injunction, it is a good idea to notify the clerk’s office as soon as possible and to transmit your response to the clerk’s office by overnight delivery as soon as it is ready. All responses received by the clerk before action on the motion are presented to the court for consideration.
As a general rule, the Fifth Circuit no longer sends a letter to the parties advising them that the court has received and filed a motion and identifying the deadline to file any response. The Fifth Circuit’s website advises of this change in its internal operating procedures and suggests that counsel register for the Fifth Circuit’s event notification service on its website to get notice right away of the filing any motions.
Any response is limited to 20 pages and, like the motion, must comply with the typeface and type style requirements of FED. R. APP. P. 32(a)(5) and (6). FED. R. APP. P. 27(d)(2); I.O.P. following 5TH CIR. R. 27.5

3. Reply
Although FED. R. APP. P. 27(a)(4) permits a reply to a response within 5 days after service of the response, the Fifth Circuit’s website warns that the court looks upon replies with great disfavor.
Not surprisingly, then, the court does not—as a general rule—grant extensions of time to file a reply to a response. Any reply is limited to 10 pages. FED. R. APP. P. 27(d)(2).

4. Internal processing A motion for stay filed in the court of appeals normally will be considered by a panel of the court.
FED. R. APP. P. 8(a)(1)(D). “But in an exceptional case in which time requirements make that procedure impracticable, the motion may be made to and considered by a single judge.” FED. R. APP. P. 8(a)(1)(D). If the motion is an emergency motion, the clerk’s office immediately assigns the motion to the next administrative judge in rotation on the court’s administrative log and simultaneously sends copies of the motion to the other panel members.
Motions are ordinarily considered without oral argument. FED. R. APP. P. 27(e).
The court of appeals may condition relief on a party’s filing a bond or other appropriate security in the district court. FED. R. APP. P. 8(a)(1)(E).

5. Appellate court jurisdiction to rule on a motion for stay or injunction Practitioners should note that neither a motion for stay nor a motion for injunction transfer jurisdiction to the appellate court. For the court of appeals to have jurisdiction to consider a motion for stay or for injunction, the court of appeals’ jurisdiction must first be properly invoked by the filing of a notice of appeal, in the case of a collateral-order appeal or section 1292(a)(1) appeal for example, or by the pendency of an original proceeding or a petition for permission to appeal. The motion for stay can be filed concurrent with a document invoking the appellate court’s jurisdiction, but it cannot precede the invocation of the appellate court’s
jurisdiction.

6. Reconsideration
A party aggrieved by the court’s ruling on a motion may file a “motion for reconsideration,” (not a motion or petition for “rehearing”). A motion for reconsideration of action on a motion must be filed within 14 days (unless the United States is a party in a civil case, see 5TH CIR. R. 27.1). Counsel should note that a motion for reconsideration must be physically received by the clerk’s office by the deadline; the mailbox rule does not apply to motions. Reconsideration requests are limited to 15 pages.

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Why Homeowners Must Time Correctly Before Appealing Adverse Decisions

03 Sunday Apr 2016

Posted by BNG in Appeal, Federal Court, Foreclosure Defense, Judicial States, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Your Legal Rights

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Appeal, Appealable, appealable orders, Appealing Adverse Decisions, Law, Lawsuit, Pro se legal representation in the United States

CASE STUDY: 989 F.2d 1074

Effective Foreclosure Defense requires timing. If you time correctly, you can save your home. Homeowners presently in litigation must time correctly when appealling adverse ruling to avoid conflict of Jurisdiction. This case shows how wrong timing before filing a Notice of Appeal resulted to Dismissal of Appeal for Lack of Jurisdiction.

989 F.2d 1074

25 Fed.R.Serv.3d 62

Don Byron REILLY; Mary Lou Reilly, Plaintiffs-Appellants,
v.
Bruce HUSSEY, Attorney; Robert J. Phillips, Attorney;
Federal Land Bank of Spokane, Defendants-Appellees.

No. 91-35903.

United States Court of Appeals,
Ninth Circuit.

Argued and Submitted Nov. 2, 1992.
Decided March 23, 1993.

Don Byron Reilly and Mary Lou Reilly, pro se.

W. Arthur Graham, Cent. Coast Farm Credit, Arroyo Grande, CA, for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before: WRIGHT, HUG, and POOLE, Circuit Judges.

EUGENE A. WRIGHT, Circuit Judge:

The Reillys appeal pro se the district court’s order dismissing their adversary complaint. Because their notice of appeal was filed while a motion for rehearing was pending in the district court, we lack jurisdiction to hear their appeal.

FACTS AND PROCEDURAL HISTORY

2 In February 1977, the Reillys negotiated a loan from the Federal Land Bank of Spokane and gave as security a deed of trust to a ten-acre tract of land in Ravalli County, Montana. By February 1986, the Reillys were in default on the loan, having missed two annual payments, and had failed to pay real property taxes. The Bank initiated foreclosure proceedings.

3 The Reillys first attempted to avoid foreclosure by filing a Chapter 11 petition in the U.S. Bankruptcy Court, District of Montana, in January 1986. The court lifted the automatic stay so that the Bank could continue with pending foreclosure proceedings in Montana state court. The property was sold at a nonjudicial foreclosure sale in March 1987. The Reillys’ appeal to the Bankruptcy Appellate Panel for the Ninth Circuit was dismissed as moot.

4 In February 1987, while that appeal was pending, the Reillys sought to prevent foreclosure by filing an adversary proceeding in the bankruptcy court. They sought to void the deed of trust on the ground that the legal description was erroneous. The court dismissed their complaint, finding the deed valid under Montana law and not voidable under the Bankruptcy Code. The Reillys appealed to the U.S. District Court, District of Montana, which dismissed the appeal with prejudice.

5 In June 1988, on a creditor’s motion, the bankruptcy court converted the Reillys’ bankruptcy to a Chapter 7 proceeding. The Reillys appealed. Following the conversion, the bankruptcy court modified its order lifting the automatic stay to allow the Bank to continue an unlawful detainer action in state court. That court found the Reillys guilty of unlawful detainer and issued an order of ejectment. In October 1989, the BAP affirmed the conversion. Five weeks later, the Montana Supreme Court dismissed the Reillys’ appeal of their ejectment, finding that the issues raised were based solely on federal bankruptcy law and had already been decided in the federal proceedings.

6 In May 1989, the Reillys filed a second adversary complaint in the bankruptcy court, which is the basis of this appeal. The Reillys again complained, among other things, that the original order lifting the stay was improper. The bankruptcy court granted the Bank’s motion to dismiss the complaint.

7 The Reillys appealed. In March 1991, they filed an amended brief in which they argued, apparently for the first time, that because Judge Peterson failed to disqualify himself at the outset, all decisions of the bankruptcy court should be set aside.1 On June 4, 1991, the district court affirmed the bankruptcy court on all issues. First, the court held that the Reillys were barred by res judicata and collateral estoppel from challenging the order lifting the stay. Second, they failed to state a claim for relief under the Agricultural Credit Act of 1987 because the Act confers no private right of action. Third, res judicata barred their challenge to the validity of the deed of trust. The district court did not rule on whether Judge Peterson should have been disqualified.

8 Having suffered yet another adverse decision, the Reillys sought a hearing before us. The fate of their appeal is determined by the timing of their filings following the district court order. On June 14, 1991, they filed in the district court a motion to reconsider. On July 3, 1991, while their motion to reconsider was pending, they filed a notice of appeal. On July 29, 1991, the district court entered an order denying the motion to reconsider.

JURISDICTION

9 We have jurisdiction to hear appeals from bankruptcy proceedings in which the district court or bankruptcy panel exercises appellate jurisdiction. 28 U.S.C. § 158(d). Such appeals are governed by the Federal Rules of Appellate Procedure, as amended in 1989. Fed.R.App.P. 6.

10 Rule 4(a)(4) of the Federal Rules of Appellate Procedure provides that a notice of appeal filed before the disposition of a post-trial motion “shall have no effect.” However, Rule 4(a)(4) does not apply in bankruptcy proceedings in which the district court or bankruptcy panel exercises appellate jurisdiction. Fed.R.App.P. 6(b)(1)(i). In contrast, Bankruptcy Rule 8015, which governs motions for rehearing2 by the district court or the bankruptcy appellate panel, is silent on the effect of appeals filed before a motion for rehearing is decided. See Bankr.Rule 8015, 11 U.S.C.A. (West Supp.1992). Rule 6(b)(2)(i) provides that, if a timely motion for rehearing is filed under Rule 8015, the time for appeal to the court of appeals runs from the entry of the order denying the rehearing.

11 The Advisory Committee on Appellate Rules deliberately omitted any provision regarding the effect of an appeal filed before the entry of an order denying a rehearing because it wished to “leave undisturbed the current state of law in that area.” Fed.R.App.P. 6, Advisory Committee Notes, 1989 Amendment, subdivision (b)(2). At the time of the amendment, this circuit had held that a notice of appeal in a bankruptcy case is null if it was filed while a motion for rehearing was pending in the district court. In re Stringer, 847 F.2d 549, 550 (9th Cir.1988). That holding is left undisturbed by the 1989 amendment of Fed.R.App.R. 6, and we reaffirm Stringer in this context.

12 In their zeal to pursue all possible avenues of review, the Reillys filed a notice of appeal while their motion for reconsideration was pending before the district court. Their notice of appeal was premature and a nullity: “[I]t is as if no notice of appeal were filed at all. And if no notice of appeal is filed at all, the Court of Appeals lacks jurisdiction to act.” Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 61, 103 S.Ct. 400, 403, 74 L.Ed.2d 225 (1982) (per curiam). Because the Reillys failed to file a notice of appeal after the district court denied their motion for reconsideration, we are without jurisdiction to hear their appeal.

13 Our holding does not deprive the Reillys of an opportunity to be heard. They have had their day in court; indeed they have had their days in many different courts. Clearly, they continue to feel aggrieved; but just as clearly, an unfavorable decision does not necessarily mean that a court has failed to fairly consider their arguments.

14 This appeal is dismissed for lack of jurisdiction.

15 DISMISSED.

1Bankruptcy Judge John L. Peterson presided over the chapter 11 proceedings and both adversary proceedings in the bankruptcy court. In June 1986, in the original bankruptcy hearing, Judge Peterson advised the parties of his wife’s minority stock interest in a creditor of the bankruptcy estate. He gave the parties the option of signing a remittal of disqualification or waiting for another bankruptcy judge. Both parties voluntarily signed the remittal

Under 28 U.S.C. § 455(e), a judge is not allowed to “accept from the parties to a proceeding a waiver of any ground for disqualification” based on the financial interest of the judge’s spouse. The Reillys did not seek review of the disqualification issue, however, until some five years and numerous proceedings later. While § 455 contains no explicit timeliness requirement, we have required that a motion to disqualify or recuse a judge under this section must be made in a timely fashion. Molina v. Rison, 886 F.2d 1124, 1131 (9th Cir.1989).

Moreover, in August 1990, while the present action was pending in district court, the Reillys filed a complaint with the Judicial Council of the Ninth Circuit alleging misconduct by Judge Peterson. We issued an order concluding that “[i]f the judge’s failure to recuse himself, despite the parties’ remittal, was conduct prejudicial to the effective and efficient administration of the business of the courts, appropriate and corrective action has been taken and this complaint therefore should be closed.” In re Charge of Judicial Misconduct, No. 90-80054, at 4 (9th Cir. Jan. 11, 1991).

2The Reillys filed a motion for “reconsideration.” The terms “rehearing” and “reconsideration” are used interchangeably. See In re Shah, 859 F.2d 1463, 1464 (10th Cir.1988); In the Matter of X-Cel, Inc., 823 F.2d 192, 194 (7th Cir.1987)

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Wrongful Mortgage Foreclosure Monetary Awards – Case in Review

30 Wednesday Mar 2016

Posted by BNG in Federal Court, Foreclosure Defense, Judicial States, Legal Research, Litigation Strategies, Loan Modification, Non-Judicial States, State Court

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Case in Review, Foreclosure, Law, Lawsuit, Monetary Awards, Mortgage loan, Pro se legal representation in the United States, Wrongful Mortgage Foreclosure

CASE IN REVIEW 1:

Jury awards $5.4 million to couple after finding fraud in foreclosure case

Houston Chronicle | December 9, 2015 Jury awards couple $5.4 million in foreclosure case against Wells Fargo and its mortgage servicer. David and Mary Ellen Wolf were several payments behind on their home mortgage and knew that foreclosure loomed. They were puzzled, though, when a foreclosure notice came early in 2011 from Wells Fargo because they hadn’t done business with that bank. Click Here to Read More

CASE IN REVIEW 2:

NY Federal judge slams Wells Fargo for forged mortgage docs

Judge Robert Drain has a message for Wells Fargo: “Forged” foreclosure documents don’t cut it in New York’s federal courts. Click Here to Read More

Foreclosure Defenses v Motion to Dismiss Strategy

28 Saturday Dec 2013

Posted by BNG in Affirmative Defenses, Federal Court, Foreclosure Defense, Judicial States, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Your Legal Rights

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Affirmative defense, Complaint, Defendant, Federal Rules of Civil Procedure, Lawsuit, Motions, Summary judgment, United States federal courts

§ 6.5 Motions to Dismiss Generally

(a) Motions to Dismiss: Strategy

Why is discussion of motions to dismiss placed before the section on answering the complaint? The reason is that every complaint must at one point be evaluated to determine whether or not dismissal would be appropriate, even though many such motions fail. If a strong motion to dismiss can be made, it should be seriously considered. This is especially true where the motion is to be based on a fundamental insufficiency in the complaint, such that little factual investigation is required by the defense, and where answering the complaint and preparing affirmative defenses, counterclaims, cross claims or third party complaints would be a substantial undertaking.

There is also a conceptual reason: the idea of a motion to dismiss is that the complaint — or more specifically, the claim — is so lacking in merit that no answer is necessary. Certainly if that is the case, and it seems likely that the judge can be made to agree that dismissal is appropriate, there is no reason to start drafting an answer.

(b) Practical Considerations

Successful motions to dismiss a complaint are a rarity, more the subject of law school civil procedure classes than actual practice. There are several reasons for this. One is the modern doctrine mandating liberal pleadings standards. In effect this means that courts will look not so much at the artfulness in the drafting of the complaint as much as the substance of the purported claim. There is also a corollary to this doctrine: The courts have a general policy of determining actions on the merits.

The effect of these approaches must be fully appreciated when considering the seeming promise of motions to dismiss, especially motions for failure to state a claim under FRCP 12(b)(6). Too often a brilliant motion to dismiss the complaint that ruthlessly exposes holes and inconsistencies in the pleadings results only in the plaintiff’s filing, at the court’s invitation, an amended complaint now free of all the deficiencies pointed out in the motion. All that is accomplished substantively is that the plaintiff has been forced to focus on its case and, with the assistance of the court’s decision on the dismissal motion, recast areas in which its complaint was weak. In the process the defendant has helped the plaintiff eliminate sinkholes and traps in the complaint that may have been useful to the defense on a later summary judgment motion or at trial. Furthermore, judges sometimes become de facto “advocates” of claims “revived” in their opinions denying motions to dismiss.

For these reasons a motion to dismiss a fundamentally meritorious claim based on technical deficiencies may not be worth the price of the motion and of the defense’s credibility with the judge. Faced with obvious weaknesses in the plaintiff’s case, it may be worth considering whether a stronger motion may be brought as a summary judgment application following a limited amount of discovery. In this instance keep in mind that many judges will not permit summary judgment motions prior to the close of discovery because of their wariness of “dueling affidavits” as a basis for making substantive rulings.

None of this is to say that there is no place for Rule 12(b) motions. There are times when the defendant simply should not have to appear in federal court, or at least not in the venue where suit has been brought. Perhaps there is an arbitration clause, bargained for at some cost, on which the defendant is entitled to rely. Some complaints are just too lacking in merit to be worthy of the defendant’s time and money. And though the phrase has become a cliche, in the right circumstance there is something to be said for “educating the judge” about a case by bringing a Rule 12 motion early on, even if, while meritorious, the motion may not be enough to end the proceedings.

§ 6.6 FRCP 12(b) Motions to Dismiss

(a) Time to Move

Just as with any other response to a complaint, a motion to dismiss under FRCP 12(b) must be made within 20 days of receipt of the summons and complaint. Making the motion stops the clock on the answer itself, pursuant to FRCP 12(a)(4). This applies to the whole of the pleadings, regardless of what part of the complaint is the subject of the motion to dismiss. Therefore, it has been held that a motion to dismiss one count of a 10-count complaint stays the time to answer the entire complaint. Note, however, that this fact should not give rise to “creative” approaches to obtaining more time to answer the complaint. Courts have defaulted parties for filing frivolous FRCP 12 motions solely to extend time. If the motion is denied or postponed, the answer is due within 10 days of receiving notice of the court’s action.

As usual, an eye must be kept on discovery. Here local rules may govern whether discovery is stayed; or the judge may have a policy that is embodied in a standing order or that is simply stated to the parties when the motion is filed. The parties also may seek from the court either a stay of discovery or permission to proceed.

(b) Strategy: Defenses vs. Motions to Dismiss

FRCP 12(b) requires all defenses to be asserted in the answer, but directs that the following seven of them may be resolved by motion or merely left as defenses:

1. Lack of subject matter jurisdiction

2. Lack of personal jurisdiction

3. Improper venue

4. Insufficiency of process

5. Insufficiency of service of process

6. Failure to state a claim on which relief can be granted

7. Failure to join a party under Rule 19.

These seven are the Rule 12 bases for motions to dismiss. The question arises whether they should be invoked in such a motion, asserted as a defense, or both.

These grounds for dismissal should always be asserted as defenses if available in good faith, regardless of whether motion practice is intended when the answer is filed or even if motions have been brought and have failed on these bases. Ultimately, however, FRCP 12(d) requires that the merits of FRCP 12 defenses must be decided at some point before trial, unless the court decides otherwise. The exception to this is where the court lacks subject matter jurisdiction, discussed in the next section.

(c) Subject Matter Jurisdiction, FRCP 12(b)(1)

As discussed in Chapter 1 “Subject Matter Jurisdiction” supra, federal courts are courts of limited jurisdiction. The complaint must state that the requirements of subject matter jurisdiction are met in the matter. More importantly, they must actually be met. If a court lacks subject matter jurisdiction, it simply has no authority to decide the case — even if the parties are willing to waive objection or stipulate to the federal court’s jurisdiction.

For this reason, a challenge to the court’s subject matter jurisdiction may be brought at any time, even after final judgment is entered and regardless of the prejudice that would result by dismissing the action after proceedings have been under way. On a motion challenging jurisdiction, the court tests the existence of subject matter jurisdiction as of the date the lawsuit was filed, not later. It is not a useful strategy, therefore, to attempt to deprive the court of jurisdiction in a diversity case after the suit is filed by having the defendant move its domicile to the same state as the plaintiff.

As the party invoking the federal court’s jurisdiction, the plaintiff must show that it has the right to do so. Therefore, once the defendant attacks the basis of the court’s subject matter jurisdiction, it has shifted the burden of coming forward to the plaintiff.

§ 6.7 Motions to Dismiss Under FRCP 12(b)(6)

(a) Introduction

The successful FRCP 12(b)(6) application is the home run of motions. It is a challenge made at the very beginning of a case and strikes at the very heart of the lawsuit. It is a statement that even if the plaintiff were given every benefit of the doubt and everything it claimed were true, the plaintiff’s claim should be dismissed — either because it is not legally cognizable or because sufficient facts have not been alleged to make out a cognizable claim.

When considering a 12(b)(6) motion, the court presumes that all the allegations of the complaint are true; it resolves all doubts or inferences in the plaintiff’s favor; and it reads the complaint in the light most favorable to the plaintiff. Needless to say, the burden of proof on such a motion is on the party making it. No material from outside the pleadings may be considered or the motion will be considered one for summary judgment (see Section 6.7(d), infra).

Given all these benefits and the liberal pleading requirements of the Rules, all the plaintiff has to do to survive the motion is make out some sort of claim for which a court might provide relief. For every home run, therefore, there are innumerably more strikeouts or at best routine hits (i.e., when partial dismissal is granted as to some claims). The purpose of this section is to assist in picking the right pitches, and to consider when a “long out” (see Section 6.7(c)(3), “Educating the Judge,” infra) can have the desired effect, even though the ball stays in the park.

(b) Issues to Raise with Clients

There is little that is more satisfying in commercial litigation defense than winning a dramatic 12(b)(6) motion on behalf of a defendant eager to end a potentially expensive and vexatious court case. Conversely, the attorney should visualize the expression on the client representative’s face as he realizes the implications of an unsuccessful 12(b)(6) motion in a commercial case — unless he has been adequately counseled about the potential costs, risks and rewards involved in the undertaking.

Because the plaintiff is given every benefit of the doubt in both law and fact, the 12(b)(6) motion theoretically requires the movant to “play out” every factual scenario demonstrate that the pleading alleges enough facts to state a claim to relief that is “plausible” within the four corners of the complaint. Similarly, every plausible legal theory that might provide relief to the plaintiff, based on the facts pleaded, must be considered.

For this reason the 12(b)(6) motion can, in some instances, be more costly and difficult than a summary judgment motion, though the motion to dismiss does not usually involve extensive affidavits as does a summary judgment application. In the latter proceeding, however, it is easier to limit the factual scenario that must be considered by submission of competent evidence that circumscribes the possibilities sketched out by the pleadings. That is harder to do under 12(b)(6), though much depends on the judge’s inclinations.

Indeed, as a final caveat to the 12(b)(6) approach, practitioners should advise their clients that granting the motion takes a certain level of judicial confidence that not every court can muster. The number of cases overturning 12(b)(6) dismissals surely dwarfs those that affirm such rulings, and it is the path of least resistance simply to decree that it would be more appropriate to decide the issues after “some discovery” has been taken. This seems to the judge like not deciding the motion, and in a sense it is; yet it is a denial of the motion, for the effects of which the defendant must be prepared.

Still and all there is a place for the judicious use of a 12(b)(6) motion. That place is not only the obvious case where the complaint puts forth a cause of action that is plainly not justifiable (e.g., seeking damages for invasion of privacy arising from the defendant’s alleged use of microwave beams to read the plaintiff’s mind5). The scenarios in which a 12(b)(6) motion is appropriate will be discussed below in Section 6.7(c). The critical point is to lay out the risks, rewards and benefits clearly for the client to allow a maximally informed choice about whether to proceed.

(c) Reasons to Bring a 12(b)(6) Motion

Despite the long odds, there are several reasons why a defendant might bring a 12(b)(6) motion, only one of which is that it might succeed in full:

(1) Elimination of Plainly Nonjusticiable Cases

It should go without saying that a 12(b)(6) motion is the appropriate vehicle for certain lawsuits that, on simple inspection, do not make out claims for legal relief. There is some point where even the minimal pleading requirements are not met, where even given every benefit of the doubt, the facts alleged cannot in any way be scrambled to create a cause of action. Identifying the line between the obvious and the less obvious candidates for inclusion in this category requires a certain amount of experience, but it can fairly be said that some complaints fall into the category of “I [the judge] know it when I see it.”

This must be contrasted, however, with the situation where the plaintiff has pleaded facts that in themselves may add up to a valid legal claim but has set forth inappropriate legal theories as the basis for recovery. Dismissal will not be granted when this is the case, though if the complaint is truly incomprehensible, the defendant may be entitled to relief under FRCP 12(e), a motion for a more definite statement (see Section 6.8(c), infra).

(2) Cutting off Novel Legal Theories

Faced with a complaint, some commercial clients may have an interest, eminently reasonable, in “snuffing out” novel legal theories put forth or even suggested by the complaint. Such theories of recovery may pose a larger threat to some defendants’ interests than the immediate pending litigation. In such cases clients might put a very high premium on delivering a crashing blow to the plaintiff and discouraging similar litigation by those similarly situated.

These are the situations, however, where fully apprising the client of the range of possibilities under 12(b)(6) is essential. The unsuccessful 12(b)(6) motion in this situation may be far worse than no motion at all and will, in all likelihood, have precisely the opposite effect from the one intended because the judge may help the plaintiff articulate the theory better. Since most 12(b)(6) motions are unsuccessful, taking this approach is one of the more daring maneuvers in commercial litigation.

The risk of this preemptive strike strategy, great as it is inherently, is heightened by a line of authority stating that it is precisely where novel legal theories are proffered that dismissal is inappropriate, on the theory that development in discovery — the bugaboo of motions to dismiss — can help the court assess the propriety of the claim.

(3) “Educating the Judge”

There may be some situations, as discussed in Section 6.5(b), supra, where a 12(b)(6) motion is an appropriate vehicle to put the defendant’s prima facie case in front of the judge, even though it is not likely to prevail. (Of course, it must still be brought in good faith, i.e., counsel must believe that it could prevail.) For example, a motion driven by the “educating the judge” goal could be useful if a fairly short track until trial is anticipated and collateral issues, or some “straw man” in the complaint, could unduly sway the court to the plaintiff’s point of view, affecting interlocutory decisions or even the trial. Similarly, the 12(b)(6) motion could clarify for the court early on just how high a burden of proof the plaintiff will have to meet to make its case. Here the 12(b)(6) motion is a way of amplifying and framing the defense in a way that the answer, even with properly crafted affirmative defenses, cannot do.

There are risks in this strategy. One is that judges can usually recognize it from afar and may not appreciate what may seem like manipulation. Another is the likelihood that in complex litigation a long discovery and motion schedule, and the attendant involvement of a magistrate, stand between the pleadings stage and trial. In that case the judge’s preliminary opinion on the merits of the respective parties will matter less than the magistrate’s view of the proper scope of interrogatories.

(4) Educating the Adversary

When facing a plaintiff whose litigation posture is vulnerable, a forceful motion may be the right tactic. Even a less assailable plaintiff may greet a motion to dismiss, and the attendant effort required to defend against it, with a new sense of realism about the ultimate sustainability of its claim or its desire to proceed as well as about the defendant’s resources and abilities.

(5) Partial Dismissal

Finally, the utility of a motion to dismiss under 12(b)(6) should be considered in light of the availability of partial dismissal, i.e., dismissal of only part of a complaint or of some but not all counts of a complaint.

This tool can be very powerful in the defense of commercial cases. Many cases involving multiple counts, often including fraud, conspiracy or RICO claims, merely come down to a basic dispute over a contract. Besides providing spurious bases for federal jurisdiction, illegitimate counts such as those are added because they make available punitive, treble or other enhanced damages as well as attorneys’ fees, none of which are normally available in contract actions. Often these “add ons” can be eliminated early, even before discovery, because many such claims have specific pleading requirements that act as gatekeepers at the earliest stage of the litigation. If it is successful with a partial dismissal motion, the defendant can:

– close off potentially dangerous or unreasonably burdensome areas of discovery;

– knock the wind out of a complaint’s sails and perhaps cause the plaintiff to question its counsel’s judgment; and

– fulfill the “education of the judge” function by undermining the credibility of the plaintiff’s claims as well as its way of presenting them to the court.

(d) Conversion into Summary Judgment Motion

If materials extrinsic to the pleadings are submitted to the court in support of or in opposition to a 12(b)(6) motion, the court does not have to consider them. Under FRCP 12(b), however, once the court does consider such matter the motion is automatically “converted” to a motion for summary judgment pursuant to FRCP 56.

Material does not literally have to be bound into the complaint to be considered “intrinsic” to it and a proper part of the consideration of a 12(b)(6) motion, without a “conversion” taking place. Courts have considered, on motions under 12(b)(6), SEC filings and other public records, legislative histories, concurrently or earlier filed pleadings and papers not part of the motion, and any documents incorporated by reference in the pleadings. It can fairly be said that any oral or written evidence not already “in the record” — public or court, physically or by reference — is regarded as “extrinsic” and will spur a conversion.

If the court does convert the 12(b)(6) motion to a summary judgment motion, it opens the door for all parties to submit their own evidence in support of the motion. [Update: It must therefore give the parties an opportunity to make the appropriate submissions.] Rather than entertain a full blown summary judgment motion at this stage, most judges will simply deny the motion until “the record is developed.”

(e) Procedure

Motion practice in general is discussed in Chapter 24 “Motion Practice,” infra. Regarding the 12(b)(6) motion in particular, take note of FRCP 12(d) which authorizes, subject to the court’s discretion, the motion hearing that is the essence of 12(b)(6) practice.

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure visit: http://www.fightforeclosure.net

Florida Homeowner’s Guide to a Civil Lawsuit

02 Saturday Nov 2013

Posted by BNG in Affirmative Defenses, Appeal, Discovery Strategies, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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This post is intended to offer a general introduction to, and overview of, the course of a “typical” civil lawsuit for homeowners wishing to fight their foreclosure in other to save their homes. Because of the vast array of actions that may be pursued in Florida courts, an exhaustive discussion of the rights, remedies, and procedures available is beyond the scope of this post.

Moreover, this post will focus mainly on the pretrial proceedings, which tend to be more “mysterious” and less publicized than the actual trial. Indeed, pretrial proceedings can be a valuable way of savings your home as many banks and lenders who were in the business of illegal wrongful foreclosure with fraudulently manufactured sets of mortgage documents never take homeowners serious until it gets to that stage. The reason why they take a homeowner serious from that point on is that Banks and lenders will then start making major expenses on legal fees to attorneys retained to respond to the wrongful foreclosure complaints filed by homeowners. With an average wrongful foreclosure litigation lasting between 2 to 5 years, and many homeowners living in their homes mortgage free throughout the litigation period without making a dime in mortgage payments, most smart Lenders and Banks try to cut their loses by quickly modifying mortgage loans with terms most favorable to homeowners in order for homeowners to remain in their rightfully owned dream homes. This fit would not have been accomplished by simply asking the banks to modify a mortgage loan as most loans have been securitized to investors. Lenders and banks from that point on serves only as “servicers” (Not Owners) to the securitized investment trusts From that point after the securitization, they are no longer owners of the mortgage loans, but simply servicers of the trust, unless they later repurchase it after default. They may try to trick homeowners into thinking that they still own their mortgage loans, absolutely not! That’s why they are giving homeowners run around in order to foreclose and steal the home right behind your nose. Folks! they can’t modify mortgage loans for the simple fact that “they cannot modify what they don’t own” period! There are thousands of investors that own the mortgage pools. Mortgage pools are controlled by PSA (Pooling and Servicing Agreement) and they must obtain consent authorizations from all investors (Real Owners), in order to modify any loans in the securitized pools that is why it is nearly impossible to modify most loans unless you take them to Court to prove their ownership, which they cannot do. Then and only then will the Lenders and Banks get those consent from investors as investors do not want to lose assets and in most times the loans will simply be repurchased from the trust by your lender after default before modification. Once repurchased, your loan is ‘get this’, “no longer a secured debt” but an unsecured debt and your “home” is no longer used as a collateral to your mortgage loan debt. Your mortgage loan may also have been paid off by forced place insurance your lender placed on your loan when you took out your loan, as that is taken out to cover their loses in the event of your default on the mortgage loan. That this why they are charging you the forced placed insurance premium when you took out your mortgage loan, in order to collect large sums of money that reduces your mortgage debt and in most cases, “pays off your entire mortgage loan” when you default. But they will still try to foreclose on you as if your loan is still a secured debt which it is not. They perpetrate those fraud due to your ignorance. That’s of course if you keep quite and let them steal your home right under your nose.

While many homeowners are familiar with the general procedures applicable in criminal cases, they may be less familiar with civil proceedings. For example, unlike criminal defendants, civil litigants enjoy no constitutional speedy trial rights. As a result, civil proceedings may seem unduly lengthy, particularly in counties where the court dockets are especially congested. Courts try to speed up the process and encourage extra-judicial resolution of disputed claims, for example, through court-annexed mediation or arbitration.

I. The Pleadings

A. The Complaint
B. Answer
C. Responsive Motions
D. Counterclaims
E. Crossclaims and Third-Party Claims
F. Amendment

II. Pretrial Procedure

A. Discovery
B. Discovery Methods
C. Protective Orders
D. Sanctions

III. Dismissal

A. Voluntary Dismissal
B. Involuntary Dismissal
C. Summary Judgment

IV. Non-Judicial Methods of Resolution

A. Mediation
B. Arbitration
C. Offers of Judgment

V. Trial

A. Demand for Jury
B. Jury Selection
C. Opening Statements
D. Motion for Directed Verdict
E. Closing Argument
F. Jury Instructions
G. Verdict

VI. Conclusion
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I. The Pleadings.

The term “pleadings” often is used synonymously (and incorrectly) to refer to any documents filed with the court. However, this term has a more limited and technical meaning. The “pleadings” in a lawsuit are simply those filings that set forth either (a) the complaining party’s allegations and causes of action; or (b) the defending party’s responses to those allegations along with any defenses or causes of action the defending party may assert. This becomes significant only when the Florida Rules of Civil Procedure distinguish between “pleadings” and other documents. For example, a motion to dismiss for failure to state a cause of action is directed solely to the “pleadings” and the court may not consider any other filings, such as exhibits, deposition testimony, interrogatory answers, etc.

A. The Complaint.

A civil action is commenced by filing a complaint or petition. Fla. R. Civ. P. 1.050. This initial pleading filed by the complaining party generally consists of factual allegations, a description of the legal claims based on those allegations, and a request for relief. Fla. R. Civ. P. 1.110(b). Some pleadings are subject to special rules. For example, in actions alleging injury or death arising out of medical malpractice, the pleadings are required to include a certificate that counsel has conducted “a reasonable investigation as permitted by the circumstances to determine that there are grounds for a good faith belief that there has been negligence in the care or treatment of the claimant.” Fla. Stat. Sec. 766.104(1) (2003). “Good faith” may be demonstrated by a written expert opinion that there is evidence of medical negligence. Id. Failure to comply with this section may subject the party to an award of fees and costs. Id. These special pleading rules are in addition to the pre-suit notice requirements applicable to medical malpractice claims. See Fla. Stat. Sec. 766.106 (2003). A lawsuit may involve one defendant, multiple defendants, or even a class of defendants. The procedures and requirements for certifying a class of plaintiffs or defendants are found in Fla. R. Civ. P. 1.220. Similarly, the lawsuit may involve multiple plaintiffs or a class of plaintiffs.

A complaint may assert more than one count. It may state different causes of action, even if they are inconsistent. This common practice is called pleading “in the alternative.” Sometimes the conduct complained about may support more than one cause of action, depending on what discovery reveals. For example, Adam contracts to sell a piece of commercial real estate to Bob. Adam decides to accept a better offer from Charles. Bob brings a lawsuit against Adam after Adam reneges on their agreement. Bob may seek monetary damages because he will have to incur additional expenses in finding another suitable property. However, Bob also may sue in the alternative, for “specific performance,” which simply means that the original contract between Bob and Adam would be enforced and Adam would be required to sell the property to Bob, instead of paying Bob money damages.

Therefore, a party often does not have to choose initially which theory it will proceed on; however, the party ultimately can recover only once. Therefore, Bob cannot have both remedies and will have to choose which one he wants.

A party also may plead claims that are inconsistent with each other. As one court has noted, this is because “the pleadings in a cause are merely a tentative outline of the position which the pleader takes before the case is fully developed on the facts.” Hines v. Trager Constr. Co., 188 So. 2d 826, 831 (Fla. 1st DCA), cert. denied, 194 So. 2d 618 (Fla. 1966). This rule applies equally to defendants. Therefore, a defendant may raise defenses that are inconsistent with each other.

The relief most commonly sought is money damages. Compensatory damages are intended to compensate the injured party for its loss. Punitive or exemplary damages are awarded beyond the actual loss and are intended to punish the wrongdoer and to deter similar conduct by others. The availability of punitive damages is limited by statute and court rule. See Fla. Stat. Sec. 768.72 (2003). This statute prevents a party from even including a claim for punitive damages in the complaint until that party has presented record evidence sufficient to support a jury verdict for punitive damages. This is important because the party seeking punitive damage is not entitled to the discovery of information concerning the other party’s financial net worth until the court is satisfied that a triable claim for punitive damages has been established. Id. In 2003, these requirements were incorporated into Fla. R. Civ. P. 1.190(f).

A party also may seek injunctive relief, i.e., an order by the court directing a party to do some act (positive) or to refrain from doing some act (negative). Once such an order is entered by a court, noncompliance with that order may be punishable as contempt of court.

One form of injunctive relief frequently requested is “specific performance,” which is essentially a direction to a party to perform its contract. Specific performance may be requested in land sales contracts and non-compete agreements. However, this remedy is not available to enforce certain types of contracts, such as personal service contracts.

A party also may seek declaratory relief. The trial courts have jurisdiction “to declare rights, status, and other equitable or legal relations whether or not further relief is or could be claimed.” Fla. Stat. Sec. 86.011 (2003). This may include the interpretation and declaration of rights under “a statute, regulation, municipal ordinance, contract, deed, will, franchise, or other article, memorandum, or instrument in writing.” Fla. Stat. Sec. 86.021 (2003). The declaration may be affirmative or negative and “has the force and effect of a final judgment.” Fla. Stat. Sec. 86.011 (2003). For example, declaratory judgment proceedings frequently are initiated by insurance companies seeking a determination of their obligation to defend against another action.

B. Answer.

After being served with the initial pleading, the defendant (or respondent) must respond to it. A defendant has a couple of options at this stage.

Typically the defendant files an answer, which responds to each allegation of the complaint and which may set forth one or more defenses. Fla. R. Civ. P. 1.110(c). Under the rules of civil procedure, “affirmative defenses” must be asserted in a responsive pleading or motion to dismiss or they will be waived. Fla. R. Civ. P. 1.110(d). Affirmative defenses are those defenses that “avoid” rather than deny. For example, the statute of limitations is an affirmative defense. By raising this defense, the defendant asserts that even if the defendant committed all of the horrible acts alleged by the plaintiff, the plaintiff has no cause of action because the action was not filed in a timely fashion. In that respect the claim is “avoided,” rather than denied.

C. Responsive Motions.

In lieu of, or in addition to, filing an answer, the defendant may move to challenge the legal sufficiency of the claims raised by the plaintiff. Fla. R. Civ. P. 1.140. These rules apply equally to counterclaims, crossclaims, and third-party claims. This motion is not a “pleading.” The defendant may argue that the complaint “fails to state a claim,” that is, even assuming that the facts alleged in the complaint are true, the law does not recognize a cause of action. Fla. R. Civ. P. 1.140(b)(6). For example, a store patron sues the grocery store for damages after he is assaulted by a third person in the vacant lot next door. The grocery store will move to dismiss, claiming that the store patron has failed to state a cause of action because it has no duty to protect customers off the premises. An out-of-state defendant might argue that the court lacks “personal jurisdiction” over him or her Fla. R. Civ. P. 1.140(b)(2). because he or she lacks sufficient “contacts” with the state, such as an office or business transactions in the state. This is based on the federal due process clause. Before a court may exercise personal jurisdiction over a nonresident defendant, that defendant must possess “certain minimum contacts with the state” so that “maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice’.” Walt Disney Co. v. Nelson, 677 So. 2d 400, 402 (Fla. 5th DCA 1996) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

Other defenses that might be raised at this stage include failure to join an indispensable party, Fla. R. Civ. P. 1.140(b)(7). lack of subject matter jurisdiction, Fla. R. Civ. P. 1.140(b)(1). Subject matter jurisdiction refers to the court’s authority or competence to preside over certain matters. For example, by statute, circuit courts lack subject matter jurisdiction to hear matters involving amounts less than $15,000.00. The subject matter for such actions is vested in the county courts. See Fla. Stat. Sec. 34.01(1)(c) (2003). improper venue, Fla. R. Civ. P. 1.140(b)(3). Venue is governed by Fla. Stat. Ch. 47 (2003), except where the Legislature has provided for special venue rules. See, e.g., Fla. Stat. Sec. 770.05 (2003) (limiting choice of venue in actions involving “libel or slander, invasion of privacy, or any other tort founded upon any single publication, exhibition, or utterance”). and insufficiency of process Fla. R. Civ. P. 1.140(b)(4). “Insufficiency of process” refers to the actual document which is served. To determine if the process is adequate, one should examine it to determine that it is signed by a clerk of court or the clerk’s deputy, it bears the clerk’s seal, a correct caption, the defendant’s correct name, the name of the appropriate state, the return date, the name and address of the party or lawyer causing process to be issued, and the name of any defendant organization. If it is not a summons, it should comply with the statute or rule that authorizes its issuance. See H.

Trawick, Florida Practice & Procedure Sec. 8-22, at 170-72 (1999). or service of process. Fla. R. Civ. P. 1.140(b)(5). A defect in the “service of process” claims that the defendant was not served appropriately: for example, he or she was not served personally, when required. Service of process is governed by Fla. R. Civ. P. 1.070 and by Fla. Stat. Chs. 48, 49 (2003). Certain defenses are waived if not raised either by an answer (or other responsive pleading) or by motion to dismiss, such as personal jurisdiction, improper venue, and insufficiency of process or service of process. Fla. R. Civ. P. 1.140(h)(1).

A defendant also may move for “a more definite statement” if the pleading is so vague or ambiguous that the defendant cannot frame a sufficient response to it Fla. R. Civ. P. 1.140(e). or it may move to “strike” portions as “redundant, immaterial, impertinent or scandalous.” Fla. R. Civ. P. 1.140(f).

D. Counterclaims.

In addition to its responsive pleading, a defendant may file a counterclaim, which operates like a complaint, except that the defendant is now the counterclaim plaintiff. Fla. R. Civ. P. 1.170. Thus, a counterclaim sets out factual allegations, legal claims, and a request for relief, just like a complaint. Id. A counterclaim requires a response by the “counterclaim defendant,” who was the plaintiff in the initial complaint. See Fla. R. Civ. P. 1.100(a) and 1.110(c).

Counterclaims may be “permissive” or “compulsory.” Fla. R. Civ. P. 1.170(a), (b). A counterclaim is “compulsory” and, therefore, must be raised in he current action if it “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction.” Fla. R. Civ. P. 1.170(a). On the other hand, a counterclaim is “permissive” if it does not arise out of the transaction or occurrence that is the subject matter of the opposing party’s claim. Fla. R. Civ. P. 1.170(b). This designation determines whether the counterclaim must be raised at this time or whether the defendant/counterclaim plaintiff can bring a separate action on the counterclaim. Fla. R. Civ. P. 1.170(a), (b).

E. Crossclaims and Third-Party Claims.

A defendant may file a crossclaim against another defendant Fla. R. Civ. P. 1.170(g). or may file a third-party complaint against a nonparty. Fla. R. Civ. P. 1.170(h). Crossclaims and third-party claims include factual allegations, legal claims, and requests for relief. They also require a response by the crossclaim or third-party defendants. Fla. R. Civ. P. 1.100(a). In practice, the pleadings can become quite complicated because of the number of possible claims which may be asserted. For example, a crossclaim defendant can assert a counterclaim against the crossclaim plaintiff and can assert a third-party claim against other nonparties. Multiple plaintiffs who are subject to a counterclaim can assert cross-claims against each other or third-party claims against other nonparties. There may be fourth party complaints. Understanding the availability of crossclaims, counterclaims and third-party claims by various parties aids in comprehension when one is faced with a lengthy caption identifying one party as a defendant, a counterclaim plaintiff, a crossclaim defendant, and a third-party plaintiff, all at the same time.

F. Amendment.

A party may amend the pleading once as a matter of right if there has been no responsive pleading. Otherwise, leave of court or written consent of the other side is required. Fla. R. Civ. P. 1.190(a). Leave of court is “given freely when justice so requires.” Id. Frequently a party will amend the pleading to cure any deficiencies addressed by a motion to dismiss. Amendments may be allowed even after trial under certain circumstances. Fla. R. Civ. P. 1.190(b).

II. Pretrial Procedure.

After responsive pleadings or motions are due, the court may schedule a case management conference to try to expedite and streamline litigation, for example, by scheduling service of papers, coordinating complex litigation, addressing discovery issues, pretrial motions and settlement issues, requiring the parties to file stipulations, etc. Fla. R. Civ. P. 1.200(a).
Later, the court may schedule a pretrial conference to address simplification of issues, amendments, admissions by one party, experts, etc. The failure of a party or its attorney to cooperate in these conferences may result in sanctions. Fla. R. Civ. P. 1.200(b), (c); Fla. Stat. Sec. 768.75(1) (2003).

A. Discovery.

Discovery occupies a large part of most civil lawsuits because Florida courts do not favor trial “by ambush.” Therefore, the rules of civil procedure encourage, indeed mandate, complete discovery. In practice, however, discovery disputes occupy a large amount of attorney and judge time.

Generally, discovery is allowed of “any matter, not privileged, that is relevant to the subject matter of the pending action.” Fla. R. Civ. P. 1.280(b)(1). In this context, “relevance” has a very broad meaning. Information is discoverable if it “appears reasonably calculated to lead to the discovery of admissible evidence.” Id.

The goals of discovery are several. Each party desires to know what the other party intends to present at trial so as to avoid any nasty surprises. Each party also seeks to obtain evidence either to support its claims and/or defenses or rebut the opposing party’s claims and/or defenses, whether directly or through impeachment. Discovery permits a party to obtain information concerning what documents the other side intends to introduce, what that party’s experts and other witnesses will say and how that party intends to prove its claims and/or defenses. In cases in which punitive damages legitimately have been sought, the plaintiff may obtain financial worth information from the alleged wrongdoer. However, keep in mind that punitive damages only may be requested with prior permission of the court. See Fla. Stat. Sec. 768.72 (2003).

While discovery is very broad, it is not without limitation. For example, the other side generally cannot discover privileged information. Fla. R. Civ. P. 1.280(b)(1). Examples of evidentiary privileges recognized by statute are: journalist’s privilege, Fla. Stat. Sec. 90.5015 (2003); attorney-client communications, Fla. Stat. Sec. 90.502 (2003); psychotherapist-patient communications, Fla. Stat. Sec. 90.503 (2003); sexual assault counselor-victim communications, Fla. Stat. Sec. 90.5035 (2003); domestic violence advocate-victim communications, Fla. Stat. Sec. 90.5036 (2003); husband-wife communications, Fla. Stat. Sec. 90.504 (2003); communications to clergy, Fla. Stat. Sec. 90.505 (2003); accountant-client communications, Fla. Stat. Sec. 90.5055 (2003); and trade secrets, Fla. Stat. Sec. 90.506 (2003). The rules also restrict a party’s ability to obtain documents and tangible things prepared “in anticipation of litigation” by the other side. Fla. R. Civ. P. 1.280(b)(3). This is also known as the “work-product” privilege. The rules severely limit a party’s ability to discover information concerning experts who have been retained by the other side in anticipation of litigation but who are not expected to testify at trial. Fla. R. Civ. P. 1.280(b)(4)(B).

B. Discovery Methods.

There are several mechanisms for obtaining discovery. To a large extent, the type of discovery method employed and its timing depend on the information desired and the particular style of the legal practitioner.

1. Depositions.

A “deposition” is an oral examination of a person under oath that is recorded by a stenographer and may be videotaped or audiotaped. Fla. R. Civ. P. 1.310. A party deponent may be required to produce documents during the examination. Fla. R. Civ. P. 1.310(b)(5). Depositions of parties may be used by the other side for any purpose. Fla. R. Civ. P. 1.330(a)(2). Depositions may be taken by telephone. Fla. R. Civ. P. 1.310(b)(7). Depositions frequently are used to impeach subsequent testimony. Sometimes, depositions may be taken prior to the filing of a civil action or during appeal to preserve testimony. Fla. R. Civ. P. 1.290. Depositions may or may not be transcribed, depending upon the wishes of the parties. Depositions also may be conducted on written questions. See Fla. R. Civ. P. 1.320. This method is not used frequently.

2. Interrogatories.

“Interrogatories,” another common discovery method, are written questions that are served on a party Although the rules allow for any person to be deposed, interrogatories and requests for admission may be directed only to parties. See Fla. R. Civ. P. 1.340(a) (“a party may serve upon any other party written interrogatories”) and 1.370(a) (“[A] party may serve upon any other party a written request for the admission of the truth of any matters within the scope of rule 1.280(b)”). and that require written responses within thirty (30) days. Fla. R. Civ. P. 1.340(a). The rules limit the number of questions to thirty (30) without court approval. Id. Form interrogatories pre-approved by the Florida Supreme Court must be used if applicable. Id. Interrogatories must be answered separately, fully, in writing, and under oath unless objections are made. Id. Like deposition testimony, interrogatory answers frequently are used to impeach subsequent testimony.

A party may produce records in lieu of answering an interrogatory if the answer may be derived from those records and if it is equally burdensome for the party to determine the answer as it is for the party seeking the information. Fla. R. Civ. P. 1.340(c).

3. Production of Documents and Things by Parties.

A party may be required to produce documents or other tangible things for inspection and/or copying by the other side. Fla. R. Civ. P. 1.350(a). “Documents” are defined broadly to include writings, drawings, graphs, charts, photographs, phono-records and other “data compilations” from which information may be obtained or translated. See Fla. R. Civ. P. 1.350. The party seeking the information may test and sample the tangible items. Fla. R. Civ. P. 1.350(a)(2). A party may request to enter upon designated land or property to inspect some object or operation. Fla. R. Civ. P. 1.350(a)(3).

4. Production of Documents and Things by Nonparties.

A party also may obtain documents from nonparties by issuing a subpoena directing production of documents or things without deposition. See Fla. R. Civ. P. 1.351(a). Other parties must be notified at least ten (10) days before the subpoena issues so that they may object. Fla. R. Civ. P. 1.351(b). If another party objects, this method of nonparty discovery becomes unavailable. Fla. R. Civ. P. 1.351(c). If there is no objection, the nonparty may comply with the subpoena by providing copies of the documents or things sought. Fla. R. Civ. P. 1.351(e).

5. Mental and Physical Examinations.

In certain circumstances, a party may request that a qualified expert conduct a physical or mental examination of a party, or a person in that party’s control or custody. Fla. R. Civ. P. 1.360(a). This discovery method is utilized most often in personal injury cases and otherwise when a person’s physical or mental condition is in controversy. The party requesting the examination must demonstrate good cause. Fla. R. Civ. P. 1.360(a)(2).

6. Request for Admissions.

An important, but often under-utilized, form of discovery is the “request for admissions.” Fla. R. Civ. P. 1.370. One party serves upon another party a written request that the party admit to the truth of certain matters, including statements or opinions of fact or the application of law to fact, or the genuineness of documents. Fla. R. Civ. P. 1.370(a). If the other side fails to respond or object within thirty (30) days, the facts are considered admitted, which means that they are conclusively established. Fla. R. Civ. P. 1.370(b). The requesting party also may move to determine the sufficiency of the responses. Fla. R. Civ. P. 1.370(a). If the court decides that a response does not comply with the rule, the matter may be deemed admitted or an amended answer required. Id. If a party fails to admit a matter and the other side later proves that matter, the party may have to pay the costs incurred by the other side in making that proof. Id. Recently, the Florida Supreme Court revised the rules of civil procedure to limit the number of requests for admissions to thirty (30).Fla. R. Civ. P. 1.370(a).

C. Protective Orders.

At any time, a party or nonparty from whom discovery is sought may ask the court to enter a protective order to protect that person from “annoyance, embarrassment, oppression, or undue burden or expense.” Fla. R. Civ. P. 1.280(c). Such a protective order may prohibit discovery, limit its scope, or effectuate other protective measures. Id.

D. Sanctions.

A party who is dissatisfied with the other side’s cooperation in discovery may seek an order compelling discovery. Fla. R. Civ. P. 1.380(a). If a motion to compel is granted, the opposing party shall pay the moving party’s expenses incurred in obtaining the order, which may include attorney’s fees, unless the opposition to the motion was justified or other circumstances make an award of expenses unjust. Fla. R. Civ. P. 1.380(a)(4). Similarly, if the motion is denied, the moving party shall pay the nonmoving party’s expenses unless the motion was substantially justified or other circumstances make an award of expenses unjust. Id.

If the court orders discovery, failure to obey that order may be punishable as contempt. Fla. R. Civ. P. 1.380(b). The court has many available sanctions for discovery violations, particularly when the recalcitrant person is a party. Certain matters may be deemed established or a party may be prevented from opposing or supporting claims or defenses or from introducing evidence. Fla. R. Civ. P. 1.380(b)(2). The court may strike pleadings, dismiss the action, or enter a default judgment. Id. However, the failure to submit to a physical or mental examination is not punishable by contempt. Fla. R. Civ. P. 1.380(b)(2)(E).

III. Dismissal.

Frequently, civil actions are dismissed before a trial on the merits of the underlying claims. In addition to settlement, dismissal of a civil action may come about under a number of circumstances.

A. Voluntary Dismissal.

A party’s ability to dismiss its own action is limited by the rules of civil procedure. Fla. R. Civ. P. 1.420. The dismissal rules also apply to counterclaims, crossclaims, and third-party claims. A party may dismiss its lawsuit voluntarily without a court order prior to trial, as long as no motion for summary judgment has been heard or one has been denied and the case has not been submitted to the fact-finder. Fla. R. Civ. P. 1.420(a)(1)(A). An action may be dismissed by stipulation of the parties. Fla. R. Civ. P. 1.420(a)(1)(B). If the plaintiff previously has dismissed a similar case, this second dismissal will operate as an adjudication on the merits and the plaintiff will not be permitted to refile the action. Fla. R. Civ. P. 1.420(a)(1). Otherwise, the plaintiff may be able to refile the action. However, the plaintiff may be required to pay costs before bringing a similar action against the same party. Fla. R. Civ. P. 1.420(d).

B. Involuntary Dismissal.

The court may enter an order of dismissal as a sanction for failure to comply with court rules or orders. Fla. R. Civ. P. 1.420(b). In evaluating whether the compliance merits this drastic sanction, the court considers the intent of the noncompliant party, the existence of previous sanctions, the involvement of the client, the degree of prejudice to the other side, and any justification for noncompliance. See H. Trawick, Florida Practice & Procedure Sec. 21-5, at 335-37 (1999).

If a case is tried to the court (i.e., without a jury), a party may seek involuntary dismissal if the other side, after completing its presentation of evidence, has failed to show a right to relief. Fla. R. Civ. P. 1.420(b).
Unless the order states that the dismissal is without prejudice, an involuntary dismissal under this rule is an adjudication on the merits and precludes the plaintiff from refiling the action. See, e.g., Drady v. Hillsborough County Aviation Auth., 193 So. 2d 201 (Fla. 2d DCA 1967), cert. denied, 210 So. 2d 223 (Fla. 1968).

An action shall be dismissed by the court for failure to prosecute if there has been no record activity for one year unless the court has stayed the action or a party shows good cause prior to the hearing. Fla. R. Civ. P. 1.420(e). In practice, this rule is strictly enforced.

C. Summary Judgment.

After the lawsuit has been filed, either party may move for summary judgment, subject to certain time restrictions. Fla. R. Civ. P. 1.510. Unlike a motion to dismiss, a motion for summary judgment does more than challenge the legal sufficiency of the complaint. Of course, a summary judgment motion may be directed to a counterclaim, crossclaim, or third-party claim in the same manner. In moving for a summary judgment, one argues that the opposing party cannot present evidence that would be sufficient to demonstrate a “genuine issue as to any material fact” and that the moving party is entitled to judgment as a matter of law. Fla. R. Civ. P. 1.510(c). Orders granting summary judgment are scrutinized closely on appeal.

The motion for summary judgment may be supported or opposed by competent affidavits made on personal knowledge that set forth admissible facts. Fla. R. Civ. P. 1.510(a), (b), (e). The parties also may rely upon depositions and answers to interrogatories. Fla. R. Civ. P. 1.510(e). However, in evaluating a motion for summary judgment, a trial judge may not weigh evidence or assess credibility. If the material facts are in dispute, summary judgment may not be entered and the litigation continues.

IV. Non-Judicial Methods of Resolution.

There are several ways in which a case may be resolved by the parties before trial, with the assistance of “alternative dispute resolution” techniques.

A. Mediation.

Mediation is “a process whereby a neutral third person called a mediator acts to encourage and facilitate the resolution of a dispute between two or more parties. It is an informal and nonadversarial process with the objective of helping the disputing parties reach a mutually acceptable and voluntary agreement.” Fla. Stat. Sec. 44.1011(2) (2003). The parties also may stipulate to mediation. Fla. R. Civ. P. 1.710(b). Mediation does not suspend the discovery process. Fla. R. Civ. P. 1.710(c).

Some civil actions are never ordered to mediation, including bond estreatures, habeas corpus and extraordinary writs, bond validations, criminal or civil contempt proceedings, or any other matters specified by the chief judge of that court. Fla. R. Civ. P. 1.710(b).

The mediator may be chosen by the parties or may be appointed by the court. The chief judge maintains a list of mediators who have been certified by the Florida Supreme Court. Fla. Stat. Sec. 44.102(5) (2003). When possible, qualified individuals who have volunteered their time to serve as mediators shall be appointed. Fla. Stat. Sec. 44.102(5)(a) (2003). Often parties agree on a particular mediator in order to select someone with specialized knowledge or expertise in the area under consideration.

Parties who fail to appear at mediation without good cause are subject to sanctions. Fla. R. Civ. P. 1.720(b). The mediator controls the mediation process. Fla. R. Civ. P. 1.720(d). Counsel are permitted to communicate privately with their clients. Id. If the parties and mediator agree, mediation can proceed without counsel. Id. The mediator can meet privately with the parties or their counsel. Fla. R. Civ. P. 1.720(e).

If the mediation results in no agreement, the mediator reports this to the court without comment or recommendation. Fla. R. Civ. P. 1.730(a). The mediator also may identify pending motions or outstanding legal issues, discovery process or other actions whose resolution could facilitate the possibility of a settlement. Id. If an agreement is reached, it is reduced to writing and signed by the parties and their counsel. Fla. R. Civ. P. 1.730(b). Mediation proceedings are privileged, subject to limited exceptions. Fla. Stat. Sec. 44.102(3) (2003). Written communications in mediation are also exempt from Florida’s Public Records Act.Fla. Stat. Sec. 44.102(3) (2003).

B. Arbitration.

There are generally two types of court-ordered arbitration: mandatory non-binding arbitration and voluntary binding arbitration. In addition, arbitration often is ordered when the parties previously have agreed contractually to submit their claims to arbitration. See Fla. Stat. Sec. 682.02 (2003).

1. Mandatory (Non-Binding) Arbitration.

The court may direct the parties to participate in mandatory, non-binding arbitration. See Fla. Stat. Sec. 44.103(2) (2003). Unlike mediation, which is relatively informal, arbitration is similar to a mini-trial because arbitrators may administer oaths, take testimony, issue subpoenas and apply to the court for orders compelling attendance and production. Fla. Stat. Sec. 44.103(4) (2003). The arbitrator (or arbitration panel) renders a written decision that will become final if the parties do not submit a timely request for a trial de novo. Fla. Stat. Sec. 44.103(5) (2003). If a party requests a trial de novo and does not achieve a result that is more favorable than the arbitration award, that party may be assessed costs, including fees. Fla. Stat. Sec. 44.103(6) (2003).

2. Voluntary (Binding) Arbitration.

The parties also may agree in writing to submit their action to binding arbitration, except when constitutional issues are involved. Fla. Stat. Sec. 44.104(1) (2003). The parties may agree on the selection of one or more arbitrators; otherwise, they will be appointed by the court. Fla. Stat. Sec. 44.104(2) (2003). As in mandatory non-binding arbitration, the arbitrator has the power to administer oaths, issue subpoenas, etc. Fla. Stat. Sec. 44.104(7) (2003). A majority of the arbitrators may render a decision. Fla. Stat. Sec. 44.104(8) (2003). The Florida Rules of Evidence apply to voluntary binding arbitration proceedings. Fla. Stat. Sec. 44.104(9) (2003). Appeals to the circuit court are limited to statutorily defined issues, such as failure of the arbitrators to comply with procedural or evidentiary rules, misconduct, etc. Fla. Stat. Sec. 44.104(10) (2003). Disputes involving child custody, visitation, or child support, or the rights of a nonparty to the arbitration are non-arbitrable. Fla. Stat. Sec. 44.104(14) (2003). In addition, the court may require the parties in a medical malpractice action to submit to non-binding arbitration before a panel of arbitrators consisting of a plaintiff’s attorney, a health care practitioner or defense attorney, and a trial attorney. See Fla. Stat. Sec. 766.107(1) (2003). The panel considers the evidence and decides the issues of liability, amount of damages, and apportionment of responsibility among the parties, but may not award punitive damages. Fla. Stat. Sec. 766.107(3)(b) (2003). Voluntary binding arbitration is also available in medical malpractice actions. See Fla Stat. Sec. 766.207 (2003).

C. Offers of Judgment.

Before trial, a party may submit a written “offer of judgment” that offers to settle a claim on specified terms, e.g., for a specified amount, etc. Fla. Stat. Sec. 768.79(1) (2003). The other side has thirty (30) days to accept the offer in writing. If the plaintiff rejects an offer by a defendant under this section and ultimately obtains a judgment of no liability or at least twenty-five percent (25%) less than the offer, the plaintiff will be responsible for costs and fees from the date of the filing of the offer. Id. Likewise, if the defendant rejects a demand for judgment by the plaintiff under this section, and the plaintiff subsequently obtains a judgment that is at least twenty-five percent (25%) greater than the offer, the defendant will be responsible for plaintiff’s fees and costs incurred after the date of the filing of the demand. Id. An offer or demand may be withdrawn in writing at any time prior to its acceptance. Fla. Stat. Sec. 768.79(5) (2003). Another statute provides for the assessment of costs and fees against a party whose rejection of an offer of settlement subsequently is determined by the court to have been “unreasonable.” Unlike Fla. Stat. Sec. 768.79 an award of fees and costs under this section is not mandatory. However, this section does not apply to causes of action which accrue after October 1, 1990 and, therefore, the statute is all but obsolete. See Fla. Stat. Sec. 45.061 (2003). Given the availability of fees and costs under this section, it is a powerful mechanism for encouraging parties to consider settlement offers seriously.

V. Trial.

Although the majority of civil cases are resolved without a trial, many still proceed to trial. Once all motions directed to the last “pleading” Recall that “pleading” has a specialized meaning and refers to complaint and answer, counterclaim and response to counterclaim, crossclaim and response to crossclaim, etc.have been resolved of or, if no such motions were served, within twenty (20) days of the service of the last pleading, an action is “at issue,” and a party may notify the court that it is ready to be set for trial. Fla. R. Civ. P. 1.440(b). Typically, the court directs the parties to mediation if mediation already has not occurred. Otherwise, a trial date may be scheduled.

A. Demand for Jury.

The right to a jury trial in a civil case is not absolute and, in fact, may be waived if it is not demanded in a timely fashion. Fla. R. Civ. P. 1.430(d).

Typically, the demand for a jury trial is appended to the plaintiff’s complaint. A plaintiff may choose, however, for strategic purposes or otherwise, not to assert its jury trial right. However, both parties enjoy the right to a jury trial Fla. R. Civ. P. 1.430(a); Art. I, Sec. 22, Fla. Const. and a defendant who desires a jury trial typically will demand one in its answer or other responsive pleading. If a jury trial is not demanded within the time limits imposed by the rules of civil procedure, it is deemed waived. Fla. R. Civ. P. 1.430(d). If a jury trial is demanded, the demand thereafter may not be withdrawn without consent of the parties. Id.

A matter may be tried completely or partially to a jury. Fla. R. Civ. P. 1.430(c). However, parties are not entitled automatically to a jury trial in all cases because some matters, such as injunction proceedings, are not triable to a jury.

B. Jury Selection.

Assuming that a jury trial has been demanded, the first step in the trial process is jury selection. Prospective jurors may be provided with a questionnaire to determine any legal disqualifications (e.g., felony conviction). Fla. R. Civ. P. 1.431(a)(1). Fla. Stat. Sec. 40.013 (2003), disqualifies from jury service (1) those individuals who have been convicted of a felony and (2) the Governor, Lieutenant Governor, Cabinet officers, clerk of court, and judges. Fla. Stat. Sec. 40.013(1), (2)(a) (2003). This chapter also permits other individuals to be excused upon request, including law enforcement officers and their investigative personnel, expectant mothers and non-full-time employed single parents of children under six years old, practicing attorneys and physicians, the physically infirm, individuals over seventy (70) years old, individuals who demonstrate hardship, extreme inconvenience, or public necessity, and persons who care for certain incapacitated individuals. Id. Jurors also may be provided with questionnaires to assist in voir dire, or the oral examination of prospective jurors. Fla. R. Civ. P. 1.431(a)(2). The parties have the right to examine jurors orally on voir dire. Fla. R. Civ. P. 1.431(b). The court also may question prospective jurors. Id.

The parties may challenge any prospective juror “for cause,” i.e., if the juror is biased, incompetent, or related to a party or attorney for a party or has some interest in the action. Fla. R. Civ. P. 1.431(c)(1). There is no limit to the number of “for cause” challenges that may be raised. On the other hand, a party generally is limited to three (3) “peremptory” challenges, which do not require that the party establish cause, or any other reason for that matter. Fla. R. Civ. P. 1.431(d). However, there are constitutional limitations on peremptory challenges. For example, a party may not utilize its peremptory challenges to exclude prospective jurors in a racially discriminatory manner. See, e.g., State v. Johans, 613 So. 2d 1319, 1321 (Fla. 1993); State v. Neil, 457 So. 2d 481 (Fla. 1984); Laidler v. State, 627 So. 2d 1263 (Fla. 4th DCA 1993).

After the trial jury is selected, the court may provide for the selection of alternate jurors, and the parties generally are allowed one peremptory challenge for this process. Fla. R. Civ. P. 1.431(g). Alternate jurors are selected in the same manner as trial jurors, and are in all respects identical except that they are discharged if they are not needed when the jury retires to deliberate. Fla. R. Civ. P. 1.431(g)(1).

C. Opening Statements.

After a jury is selected, the parties present opening statements. Opening statements are not supposed to be arguments; rather, the parties should advise the jury of what the evidence will prove. After opening statements, the parties or the court may “invoke the rule,” which simply means that nonparty witnesses are excluded from the courtroom while others are testifying. Fla. Stat. Sec. 90.616 (2003). In addition, the witnesses are directed not to discuss the case with anyone other than the attorneys. H. Trawick, Florida Practice & Procedure Sec. 22-7, at 356 (1999).

D. Motion for Directed Verdict.

After the plaintiff presents its case-in-chief, the defendant may move for a directed verdict on the grounds that the plaintiff has failed to present sufficient evidence to justify submission of the case to the jury. Fla. R. Civ. P. 1.480(a). If the action is being tried to the court without a jury, the proper motion is a motion for involuntary dismissal under Fla. R. Civ. P. 1.420(b), as discussed earlier. If the motion is denied or reserved, the case proceeds, subject to the defendant’s ability to renew the motion at the close of the evidence. However, in a nonjury trial, renewal of the motion for involuntary dismissal at the close of the evidence is not authorized.

Orders granting directed verdict are unusual and scrutinized closely on appeal. Courts commonly “reserve ruling” on a motion for directed verdict and allow the case to proceed to the jury. This is a preferred approach because if the trial court grants a directed verdict and does not submit the case to the jury, and the directed verdict is overturned on appeal, the entire case must be retried. On the other hand, if the judge reserves ruling on the motion for directed verdict, the judge may override a subsequent plaintiff’s verdict and if that decision is overturned on appeal, the verdict may simply be reinstated without the necessity of a new trial.

After the plaintiff presents its case and any motions for directed verdict by either side are addressed, the defendant presents its case-in-chief. At the close of the defendant’s case, either party may move for a directed verdict. The plaintiff may present rebuttal evidence.

E. Closing Argument.

After the close of all the evidence, each side has an opportunity to present closing arguments. Because the plaintiff bears the burden of proof, the plaintiff is permitted to argue first and last (i.e., in rebuttal to defendant’s argument). The attorneys are required to confine their closing arguments to the evidence presented, along with its reasonable inferences. Alford v. Barnett Nat’l Bank, 137 Fla. 564, 188 So. 322 (1939). Case law restricts the types of arguments that may be presented in closing argument. For example, an attorney may not express a personal belief in his client or his client’s case. Miami Coin-O-Wash, Inc. v. McGough, 195 So. 2d 227 (Fla. 3d DCA 1967). He may not request that the jury place itself in his client’s shoes, i.e., the so-called “Golden Rule” argument. Bullock v. Branch, 130 So. 2d 74 (Fla. 1st DCA 1961).

F. Jury Instructions.

If the judge does not direct a verdict following the parties’ respective presentations, the case is submitted to a jury. Prior to the close of evidence, the parties must submit requested jury instructions. Fla. R. Civ. P. 1.470(b). These may include numerous form instructions pre-approved by the Florida Supreme Court. Additional instructions may need to be drafted and often there will be great debate between the parties on their wording.

The judge instructs the jurors on the manner in which they are expected to deliberate and the law that they must follow. Finally, the jurors retire to deliberate. Id. Frequently, the jury has questions during the deliberation process. The parties and their attorneys are notified of such questions. There may be some discussion or debate on how such questions are to be answered and the attorneys may object on the record to the answers ultimately provided to the jury.

G. Verdict.

Once the jury’s deliberations are complete, the verdict is announced in open court. A verdict may be either a “general” verdict or a “special” verdict. A general verdict “finds for a party in general terms on all issues within the province of the jury to determine.” H. Trawick, Florida Practice & Procedure Sec. 24-2, at 399 (1999). On the other hand, the court might employ a “special verdict,” which asks the jury to answer specific questions that determine the disputed facts. H. Trawick, Florida Practice & Procedure Sec. 24-3, at 400 (1999). For example, a special verdict form in a negligence action might require the jury to determine whether the defendant owed a duty to the plaintiff. If the answer to this question were negative, the court would enter judgment for the defendant because duty is an essential element of a negligence claim. A general verdict, on the other hand, might simply ask whether the jury’s verdict was for the plaintiff and, if so, for how much. Regardless of the form of verdict that is used, a separate verdict on each count must be required if requested by either party. H. Trawick, Florida Practice & Procedure Sec. 24-2, at 399 (1999). The verdict form is written and signed by the foreperson.

In negligence actions, the verdict is required to be itemized according to economic loss, noneconomic loss, and punitive damages (if awarded). Fla. Stat. Sec. 768.77(1) (2003). “Economic damages” refers to “past lost income and future lost income reduced to present value; medical and funeral expenses; lost support and services; replacement value of lost personal property; loss of appraised fair market value of real property; costs of construction repairs, including labor, overhead, and profit; and any other economic loss which would not have occurred but for the injury giving rise to the cause of action.” Fla. Stat. Sec. 768.81(1) (2003). In addition, damages must be itemized further into past and future damages. Fla. Stat. Sec. 768.77(2) (2003). Economic damages are computed before and after reduction to present value, but no other damages are reduced to present value. Id. After the verdict is read, either party may request that the individual jurors be polled. Each juror is asked then to confirm that the verdict read is his or her verdict. Once the requested polling is complete, the jury is discharged.

VI. Conclusion.

This post provides a general overview of the route of a civil lawsuit. Every lawsuit is different and the steps often vary dramatically. Pretrial proceedings frequently are overlooked as a valuable source of information. Although access to various components of the pretrial process is beyond the scope of this post, homeowners should view this post as a guide for successful wrongful foreclosure defense. Hopefully, this post will serve to “demystify” the pretrial process and assist homeowners gearing up to fight the wrongful foreclosure shops that are illegally snatching away their dream homes.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and needed solutions to defend or reclaim your home please visit: http://www.fightforeclosure.net

How Attorney Mistakes Can Result to Homeowners Losing their Homes in Wrongful Foreclosure Litigation.

23 Friday Aug 2013

Posted by BNG in Banks and Lenders, Case Laws, Case Study, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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Law, Lawsuit, Medical malpractice, North Carolina, Services, Statute of Limitations, Tennessee, United States

One of the biggest mistakes we see in various court cases especially in wrongful foreclosure cases where homeowners who are represented by counsel is the failure by plaintiffs’ attorneys to file the complaint within the statutes of limitation period. Attorneys fail to file a claim within the appropriate statutes of limitation for numerous reasons. For example, lawyers often fail to determine the correct statute of limitation applicable to the claim. For instance to effectively bring a TILA lawsuit against your lender, it must be filed within “One Year”, of your mortgage closing otherwise the courts can only allow the cause of action based on whether your motion for equitable tolling is granted or not.

For wrongful foreclosure homeowners who hired Attorneys to represent them, do not assume that your Attorney knows the statutes of limitation period for every cause of action you intend to bring against your lender to save your home, because if your Attorney miss all major causes of action that would have disqualified your lender from stealing your home as a result of fraud, you may end up losing your home even if your lender is liable for other violations which may entitle you to a couple of thousands of dollars in compensation. Your goal is to save your home, so it is not a matter to be taken for granted because you paid your Attorneys big bucks to represent you.

Litigation attorneys are at a greater risk of malpractice claims than all other types of attorneys. Typically, errors arising out of litigation accounted for 35% to 40% of all claims reported. Clients who lose suits often point to a
perceived error by their attorney as the reason their suit was unsuccessful and seek a remedy against the attorney. The main causes of malpractice stem from missing deadlines, failing to calendar, failing to file, failing to
meet discovery obligations, inadequate trial preparation, inappropriate post-trial actions and improper withdrawal. The use of good docketing and tickler systems and the development of good client relations can significantly reduce malpractice risk

While Attorneys obviously need to be knowledgeable about the substantive issues in any lawsuit, some Attorneys does not take care to learn and follow the procedural rules of court.

Even experienced Attorneys do not know every procedural rule for every court in which they practice. Rather, they know where to find the particular procedural rules governing the litigation and make sure they follow them,
thereby reducing their exposure to malpractice actions.

This post, while not exhaustive, provides important tips to help homeowners who are being represented by Attorneys ensure that they are getting their money’s worth thereby avoid common pitfalls that usually
result in malpractice liability when Attorneys fails their clients. After all when you pay someone $5000-$10000 to save your home, you expect them to put their best foot forward. However, always remember that (YOU ARE YOUR OWN BEST ADVOCATED), as a Pro Se Litigant with http://www.fightforeclosure.net

The post highlights ten prominent points during the course of litigation where attorneys are prone to make mistakes, emphasizing specific
types of rules and procedures that are often overlooked. Armed with the information contained in this post, homeowners can help reduce the possibility of losing the homes as a result of negligence conduct of their hired lawyers which could possibly exposure the lawyers to malpractice liability.

THESE FOLLOWING AREAS ARE WHERE THE HOMEOWNERS SHOULD PAY CLOSE ATTENTION TO – THESE ARE WHERE ATTORNEYS USUALLY MAKE MISTAKES.

A GOOD DOCKETING SYSTEM

Attorneys risk malpractice claims when they correctly identify the expiration date of a claim but fail to file the complaint in a timely manner, allowing the claim to expire. One common pitfall is that the attorney or staff person
calendars the deadline in the attorney’s calendar, but the attorney fails to check the calendar, thus missing the date.

Homeowners should ensure that their lawyers can reduce their malpractice risk by diligently calendaring statutes of limitation deadlines and other deadlines that arise within their case. Everything that involves a time limit should be entered into the docket system and the system should generate several advance warnings of each deadline to be given to the attorney and support persons involved.

Although it is ultimately the lawyer’s responsibility to meet deadlines, unforeseen circumstances may prevent the lawyer from meeting a deadline. Homeowners should ensure that their case is assigned a backup lawyer or staff member who is responsible for bringing the deadline to the attention of the main attorney on the matter; or who is able to meet a filing deadline in the lawyer’s absence.

AVOID FILING AT THE LAST MINUTE

Malpractice suits for missing the statutes of limitation also arise when the lawyer and/or his office staff simply neglect to follow through and make sure the complaint is filed with the proper court on or before the deadline. A
variety of unforeseen problems may delay filings. For example, lawyers may sometimes assume that complaints sent by overnight mail will arrive in time and be processed by the court the next day. Similarly, office staff or third
parties hired to assist with the filing may make errors, such as filing the complaint with the wrong court, or missing a last minute deadline.

Such errors can be avoided by routinely filing complaints, motions and other documents in advance of the deadline. Filing at the last minute is a risky practice. Unexpected glitches are bound to occur from time to time. Filing ahead of time will give you breathing room to resolve the unforeseeable problems that might get in the way of filing before the limitation period expires.

KNOWING THE APPLICABLE LAW

DETERMINE THE CORRECT STATUTES OF LIMITATION FOR YOUR JURISDICTION

Attorneys often miss statutes of limitation deadlines when they incorrectly assume that the statutes of limitation runs after the same amount of time in different jurisdictions. For example, the statutes of limitation for a wrongful death claim in Tennessee runs in one-year. However, a North Carolina plaintiff ’s attorney handling a wrongful death suit arising in Tennessee might assume that North Carolina’s two-year statutes of limitation for a wrongful death claim applies in the situation. If the attorney files a claim after Tennessee’s expiration date but before North Carolina’s expiration date, the attorney missed the appropriate state’s deadline and could face a claim for malpractice.

PERFORM ADEQUATE RESEARCH AND INVESTIGATION

Nearly half of all malpractice claims arise from substantive errors. Examples include failure to learn or properly apply the law, and inadequate discovery or investigation. In addition to ascertaining all relevant statutes of limitation deadlines, it is important that homeowners ensure that their attorneys are familiar and comply with the law and standards of care in each applicable state.

One common type of malpractice claim resulting from inadequate knowledge of substantive law is in the area of personal injury claims arising out of automobile accidents. Such a claim arises, for example, where the client suffers personal injury in a wreck and there is a $25,000 limit on the defendant’s auto insurance. Since the client has $100,000 worth of damages, the defendant’s carrier readily issues a check for the policy limit of $25,000. The lawyer neglects to investigate whether any other coverage
exists. The client later learns he could have recovered an additional $75,000 from his own insurance policy that included uninsured/underinsured “UM/UIM” coverage. By then, however, it is too late because the client has
already signed a release of all claims against the tortfeasor. Since “[a]n underinsured [UIM] motorist carrier’s liability is derivative of the tortfeasor’s liability,” the UIM carrier may decline to provide any coverage. Liberty Mut. Ins. Co. v. Pennington, 141 N.C. App. 495, 499, 541 S.E.2d 503, 506
(2000), cert. granted, 353 N.C. 451, 548 S.E.2d 526 (2001); see also Spivey v. Lowery, 116 N.C. App. 124, 446 S.E.2d 835 (1994) (UIM carrier was not liable after plaintiff executed general release).

Experience lawyers in these areas and situations usually require have the client execute a limited release that protects the client’s right to recover UIM or UM benefi ts. For an example of a limited release that was upheld by the courts, review North Carolina Farm Bureau, Mut. Ins. Co. v. Bost, 126 N.C. App. 42, 483 S.E.2d 452, review denied, 347 N.C. 138, 492 S.E.2d 25 (1997). In other cases, the lawyer may fail to notify the UIM carrier of the
claim in a timely manner. If the client is unable to recover from his UIM carrier because of his lawyer’s neglect, he may have a claim for damages against the attorney.

In these cases that pertains to personal injury, the law requires the plaintiff to timely serve the summons and complaint on both the tortfeasor and the UM carrier prior to the expiration of the statutes of limitation. See N.C. Gen. Stat. § 20-279.21(b)(3); Thomas v. Washington, 136 N.C. App. 750, 525 S.E.2d 839, review denied, 352 N.C. 598, 545 S.E.2d 223 (2000). Failure to properly serve either the tortfeasor or the UM carrier may result in lost benefi ts for the client and a malpractice claim against the attorney.

These types of errors usually can be prevented through careful research and methodical procedures.

When dealing with wrongful foreclosure case, homeowners should stay abreast of new legal developments. Experts should be consulted, where needed.

PROVIDE ADEQUATE SUPERVISION OVER ASSIGNED TASKS

Malpractice concerns arise when lawyers fail to adequately supervise non-lawyers or junior associates. Lawyers can be held responsible for mistakes made by their employees. See e.g., Pincay v. Andrews, 367 F.3d 1087 (9th Cir. 2004) (Judge Kozinski’s dissent; holding attorney liable for a paralegal’s miscalculation). Such malpractice risk can be minimized
by providing adequate supervision and fostering an environment where questions and concerns can be freely raised. Staff should be carefully supervised as the attorney is ultimately the responsible party.

FILING THE COMPLAINT AND SERVICE OF PROCESS

After the proper statutes of limitation period has been properly identified and the complaint properly filed, other pitfalls await the unwary attorney. Attorneys commonly make mistakes in naming and serving the proper parties. Such defects can often be corrected. However, when a lawsuit is commenced at the eleventh hour (just before the statutes of limitation expires), as in most wrongful foreclosure cases, the attorney may not
have time to correct such flaws, and the client may suffer prejudicial harm as a result.

IDENTIFY AND NAME THE PROPER DEFENDANT

One of the most common mistakes attorneys make is that they fail to discover and identify the proper name of the corporate defendant whom the plaintiff seeks to sue. In a wrongful foreclosure case that involved securitization of mortgage loans, sometimes defendants mights be more than one. To avoid such errors, homeowners should ensure that their attorneys should make every effort to ascertain the defendant’s proper
corporate name either before filing the complaint or as soon as possible thereafter through discovery. A diligent effort should be made to determine all possible entities and persons who should be named as parties in the lawsuit. If situation involves foreign defendants, take special care in correctly naming and serving foreign defendants. Foreign service requirements, including Hague Convention requirements, may need to be followed.

SERVE ALL DEFENDANTS WITHIN STATUTORILY PRESCRIBED TIME LIMITATIONS.

Attorneys who commit errors in timely serving a complaint and summons on a defendant may also face malpractice liability.

Attorneys must serve a defendant with a complaint and summons within the statutorily required time limitations. These limitations vary according
to jurisdiction. For instance, an attorney must serve a defendant to a lawsuit in federal court within 120 days of the fi ling of the complaint. Fed. R. Civ. P. 4(m). However, a defendant in a lawsuit in North Carolina State court must be served in most cases within 60 days after the date of the
issuance of the summons. N.C. Gen. Stat. § 1A-1, Rule 4(c).

Attorneys who fail to perfect service upon a defendant within the statutory expiration period may request an extension of time for service of process. A federal court will grant an extension only if the attorney provides good
cause for the delay in service. Fed. R. Civ. P. 4(m). On the other hand, a North Carolina court will issue an alias or pluries summons to extend the time period for service upon request, provided certain guidelines are met. N.C. Gen. Stat. § 1A-1, Rule 4(d)(2). Thus, an attorney may be vulnerable to malpractice claims for failing to follow the rules of the particular court in which the case is being litigated. For instance, attorneys may request an alias or pluries summons “at any time within 90 days after the date of issue of the last preceding summons in the chain of summonses.” Id. Provided that the request is not made in “violations of the letter or spirit of the rules for the purpose of delay or obtaining an unfair advantage,” an attorney may request numerous alias or pluries summonses and extend the service deadline for a lengthy period of time without committing malpractice. Smith v. Quinn, 324 N.C. 316, 319, 378 S.E.2d 28 (1989). However, an attorney who does not request an alias or pluries summons within the 90 day time period invalidates the old summons and begins a new action. See CBP Resources v. Ingredient Resource Corp., 954 F. Supp. 1106, 1110 (M.D.N.C. 1996). An attorney risks malpractice liability if the statutes of limitation runs before the alias or pluries summons is issued in such a situation.

In addition, an attorney must refer to the original summons in an alias or pluries summons or else the alias or pluries summons is invalid. Integon Gen. Ins. Co. v. Martin, 127 N.C. App. 440, 441, 490 S.E.2d 242 (1997).

In addition, the attorney may encounter the situation where he is unable to serve the defendant with the summons and complaint because the defendant has died. To complicate matters further, the statutes of limitation
has expired. Homeowners should ensure that their Attorneys consult the statutes for their respective Jurisdictions. This statute will help the lawyer resolve the issue and save the homeowners cause of action.

KEEP THE SUMMONS ALIVE OR ENTER INTO ENFORCEABLE TOLLING AGREEMENTS WITHIN THE STATUTES OF LIMITATION WHILE ENGAGING IN SETTLEMENT DISCUSSIONS.

It is often in the client’s best interest to pursue settlement before spending the time and money involved to file or serve a complaint. However, in the instants where the Banks are not willing to work with homeowners, but where rather interested in stealing the homes through wrongful foreclosure, homeowners are left with little options but to pursue the litigation with their Attorneys or Pro Se, in order to save their homes.

In such cases, it is important that the homeowner let their Counsels know that it is crucial to keep the required summons alive and/or enter into an enforceable tolling agreement with the opposing party. Such tolling agreements must be executed before the statutes of limitation passes. Regardless of how close the parties may be to settlement, the Attorneys should not let the statutes of limitation pass without invoking proper protections for the homeowners.

For More Information How You Can Aggressively Defend Your Wrongful Foreclosure on Your Own “Pro Se”, thereby Avoiding These Costly Attorney Mistakes That Can Potentially Cost You the Most Valuable Investment You Have Ever Made which is “Your Home – The American Dream” Visit http://www.fightforeclosure.net (You Are Your Own Best Advocate!)

FightForeclosure.net

~ Your "Pro Se" Foreclosure Fight Solution!

Tag Archives: Lawsuit

What Homeowners Must Know After they Have Been Sued in a Bankruptcy Adversary Proceeding

Introduction

Step 1: Answer

Step 2: Pre-Trial Conference

Step 3: Discovery

Step 4: Motions

Step 5: Trial

DEALING WITH THE LAW

What Homeowners Must Know About Mortgage Fraud & Restitution

How Homeowners Can use “Produce the Note” in Judicial & Non-judicial Foreclosure States

What Homeowners Should Know About Appeals at the 9th Circuit

What 5th Circuit Homeowners Must Know About Stay Injunction During Appeal Procedings

Why Homeowners Must Time Correctly Before Appealing Adverse Decisions

Wrongful Mortgage Foreclosure Monetary Awards – Case in Review

Jury awards $5.4 million to couple after finding fraud in foreclosure case

NY Federal judge slams Wells Fargo for forged mortgage docs

Foreclosure Defenses v Motion to Dismiss Strategy

Florida Homeowner’s Guide to a Civil Lawsuit

How Attorney Mistakes Can Result to Homeowners Losing their Homes in Wrongful Foreclosure Litigation.

Introduction

Step 1: Answer

Step 2: Pre-Trial Conference

Step 3: Discovery

Step 4: Motions

Step 5: Trial

DEALING WITH THE LAW

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Jury awards $5.4 million to couple after finding fraud in foreclosure case

NY Federal judge slams Wells Fargo for forged mortgage docs

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