Installment loans in Florida

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Florida courts continue to grapple with various issues related to the statute of limitations for installment loans and whether a previously dismissed foreclosure action bars suit on subsequent defaults. As we have, in U.S. Bank National Association v. Bartram, Florida’s Fifth District Court of Appeal decided that the dismissal of a previous foreclosure action essentially nullified the initial acceleration of the loan, such that subsequent installments had then become due and the statute of limitations period ran from each missed installment. Bartram certified the following question to the Florida Supreme Court:

Does acceleration of payments due under a note and mortgage in a foreclosure action that was dismissed pursuant to rule 1.420(b), Florida Rules of Civil Procedure, trigger application of the statute of limitations to prevent a subsequent foreclosure action by the mortgagee based on all payment defaults occurring subsequent to dismissal of the first foreclosure suit?

In Deutsche Bank Trust Co. Americas v. Beauvais, Florida’s Third District Court of Appeal initially came to a different conclusion, holding that an involuntary dismissal of a foreclosure action did not, in and of itself, negate the lender’s acceleration of the debt such that new defaults could occur under the loan for statute of limitations purposes. Recently, however, Beauvais was set for rehearing before the Third DCA, with oral arguments held on November 12, 2015 and briefing invited on the following issues:

  1. Where a foreclosure action has been dismissed with the note and mortgage still in default:
    • Does the dismissal of the action, by itself, revoke the acceleration of the debt balance thereby reinstating the installments terms?
    • Absent additional action by the mortgagee can a subsequent claim of acceleration for a new and different time period be made?
    • Does it matter if the prior foreclosure action was voluntarily or involuntarily dismissed, or whether the dismissal was with or without prejudice?
    • What is the customary practice?
  2. If an affirmative act is necessary by the mortgagor to accelerate a mortgage, is an affirmative act necessary to decelerate?
  3. In light of Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004), is deceleration an issue or is deceleration inapplicable if a different and subsequent default is alleged?

On January 6, 2016, in Solonenko v. Georgia Notes 18, LLC, Florida’s Fourth District Court of Appeal considered a similar issue, holding that a voluntary dismissal of a previous foreclosure action does not bar subsequent actions and acceleration based upon defaults on subsequent installment payments, and certifying conflict with Beauvais. Whether or not the Third DCA, upon reconsideration of Beauvais, will follow the rationale of the Fourth and Fifth District Courts of Appeal remains to be seen.

Lenders should remain aware of the potentially changing landscape regarding statute of limitations and the idea of “deceleration” of loans, and should carefully monitor the Florida Supreme Court’s consideration of the issues raised by Bartram and the opinions issued by the District Courts of Appeal, including the Third DCA’s reconsideration of Beauvais, in the meantime. These pending opinions will have a huge impact on a lender’s ability to pursue foreclosure actions based on subsequent installment payment defaults going forward.

Interesting facts

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Henry Lotz closing the gate to the barns at the Midway City Dairy Association, near Santa Ana. Orange County, California. Seven families obtained a loan of seven thousand eight hundred fifty dollars f
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  • Henry Lotz closing the gate to the barns at the Midway City Dairy Association, near Santa Ana. Orange County, California. Seven families obtained a loan of seven...
  • Photograph size: 8 x 10
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