Jeffrey Kuntz, Florida Legal Blog
In Taylor v. Deutsche Bank National Trust Company, as Trustee (5D09-4035), the Fifth District affirmed the trial court’s summary final judgment in favor of Deutsche Bank. The court began the opinion by stating “This is yet another in the nationwide series of cases dealing with the processing of mortgages, such as the one given by Mr. Taylor on his residential real property, by use of the system operated by a corporation known as Mortgage Electronic Registration Systems, Inc. (“MERS”).” The court then noted:
The mortgage defines ‘Lender’ as First Franklin, and MERS as a separate corporation acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is specifically described (in bold print) as the ‘mortgagee under the Security Instrument.’…The mortgage then specifies that the borrower, Mr. Taylor, ‘does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender’s successors and assigns) and to the successors and assigns of MERS, the following described property. . . .’
[Taylor’s] amended answer denied that the note was assigned by MERS to Deutsche Bank and denied that the mortgage was properly assigned to it. The affirmative defenses, among other things, alleged that Deutsche Bank did not have standing to enforce the note because the exhibits attached to the complaint were insufficient to demonstrate standing and inconsistent with Deutsche Bank’s assertion that it owned the note and mortgage….Mr. Taylor argued before the trial court, as he does before this court, that because the note was not indorsed and contained neither an allonge nor a specific assignment, it was payable only to First Franklin, and that Deutsche Bank, therefore, had no standing to attempt to enforce it.
The court concluded:
Because a promissory note is a negotiable instrument, and because a mortgage provides the security for the repayment of the note, this statute leads to the conclusion that the person having standing to foreclose a note secured by a mortgage may be either the holder of the note or a nonholder in possession of the note who has the rights of a holder….Thus, Mr. Taylor’s foundational argument — that only a holder in due course can enforce the note by foreclosing the mortgage — is flawed in a significant way. The statute allows a nonholder with certain specific characteristics to foreclose as well.
In the present case MERS is identified in the mortgage as a corporation that ‘is acting solely as a nominee for Lender,’ and as ‘the mortgagee under this Security Agreement.’ The mortgage also contains the following provision:
Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property, and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.
(Emphasis added). It appears, consequently, that the mortgage document, reciting the explicit agreement of Mr. Taylor, grants to MERS the status of a nonholder in possession as that position is defined by section 673.3011.
MERS, however, is not the party that foreclosed the subject note and mortgage. Rather, Deutsche Bank is…..The written assignment filed as part of the summary judgment documents in the case before us specifically recites that MERS assigned to the appellee, Deutsche Bank…..We conclude, accordingly, that the written assignment of the note and mortgage from MERS to Deutsche Bank properly transferred the note and mortgage to Deutsche Bank. The transfer, moreover, was not defective by reason of the fact that MERS lacked a beneficial ownership interest in the note at the time of the assignment, because MERS was lawfully acting in the place of the holder and was given explicit and agreed upon authority to make just such an assignment.
Citing to the Second District, the court also noted:
…that ‘the Florida real party in interest rule, Fla. R. Civ. P. 1.210(a), permits an action to be prosecuted in the name of someone other than, but acting for, the real party in interest.’