IN THE DISTRICT COURT OF APPEALOF THE SECOND DISTRICT, STATE OF FLORIDA

JACINTO CASTELLANO andELOENA BETES,

Defendants/Appellants

v. DCA CASE NO. 2D15-5457

THE BANK OF NEW YORK, et al.,Plaintiff/Appellees

____________________________________________/

APPELLANT’S INITIAL BRIEF

Randall O. Reder, P.A.Florida Bar No. 2642101319 W. Fletcher Ave.Tampa, FL 33612-3310phone (813) 960-1952fax (8130 265-0940email reder@redersdigest.comsec. email ABoucher@ERRofTampa.com

TABLE OF CONTENTS

Table of Citations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Statement of Facts and Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Summary of Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11

Issues Presented

I. Whether the Lower Tribunal erred by entering a judgment of foreclosure where Bank of New York failed to prove: 1. the promissory note was lost,

2. there was an original allonge attached to the original note 3. Bank of New York was in construction possession when the note was lost,

4. Bank of New York had the right to enforce the promissory note when it was lost,

5. the loss of the promissory note was not the result of a transfer or lawful seizure, 6. there is no evidence linking the servicer to Bank of New York, and 7. there was no transfer of the chose in action from the previous servicer to the current one . . . . . . . . . . . . . .13

II. Whether the Lower Tribunal erred by allowing Bank of New York’s witness to testify as to matters that were not contained in any of the documents submitted into evidence as a business records exception to the hearsay rule. . . . . . . . . . .34

III. Whether the Lower Tribunal erred by not requiring Bank of New York to provide adequate security in case the entity that now possesses the original note seeks to enforce it. . . . . . . . . . . . . . . . . ………………………………36

2

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

3

TABLE OF CITATIONSCases

Adams v. Madison Realty & Development, Inc., 853 F.2d 163 (3d Cir. 1988).......19

Beauchamp v. Bank of New N.Y., 150 So.3d 827 (Fla. 4th DCA 2014)...................33

Blitch v, Freedom Mortgage Co., 185 So.3d 645, 646-647 (Fla. 2d DCA 2016)...34

Booker v. Sarasota, Inc., 707 So. 2d 886 (Fla. 1st DCA 1998)..............................18

Boumarate v. HSBC Bank USA, N.A., 172 So.3d 535, 536 (Fla. 5th DCA 2015). .30

Boyd v. Wells Fargo Bank, N.A., 143 So.3d 1128, 1129 (Fla. 4th DCA 2014)......11

Caballero v. U.S. Bank National Association, 189 So.3d 1044, 1045-1046 (Fla. 2d DCA 2016).........................................................................21

Campbell Printing Press Manuf’g Co. v. Walker, 22 Fla. 412, 421, 1 So. 59, 64-65 (1886).............................................................................................22

Cardona v. Nationstar Mortg., LLC, 174 So.3d 491 (Fla. 4th DCA 2015);............33

Chestnut v. Robinson, 85 Fla. 87, 95 So. 428 (1923)..............................................23

Correa v. U.S. Bank Nat’l. Ass’n., 118 So.3d 952 (Fla. 2d DCA 2013)...........31, 36

Cruz v. JP Morgan Chase Bank, 41 Fla. L. Weekly D1412a (Fla. 4th DCA June 15, 2016)...................................................................................21

Deutsche Bank National Trust Co. v. Boglioli, 154 So.3d 494, 495(Fla. 4th DCA 2015)................................................................................................26

Ensler v. Aurora Loan Servs., LLC, 178 So. 3d 95, 97 (Fla. 4th DCA 2015).........11

Figueroa v. Fed. Nat’l Mortg. Ass’n, 180 So.3d 1110 (Fla. 5th DCA 2015)..........14

Fiorito v. JP Morgan Chase Bank, 174 So.3d 519 (Fla. 4th DCA 2015)...............20

Fla. Bar v. Greene, 926 So. 2d 1195 (Fla. 2006)..............................................32, 34

4

Ginsberg v. Lennar Florida Holdings, Inc., 645 So.2d 490 (Fla. 3d DCA 1994).. 28

GMAC Mortg., LLC v. Choengkroy, 98 So. 3d 781 (Fla. 4th DCA 2012)..............12

Home Outlet, LLC v. U.S. Bank National Association, 41 Fla. L. Weekly D1490a (Fla. 5th DCA June 24, 2016)....................................................................25

Jelic v. LaSalle Bank, Nat'l Ass'n, 160 So.3d 127, 130 (Fla. 4th DCA 2015).........26

Lamson v. Commercial Credit Corp., 531 P.2d 966, 967 (Col. 1975)....................19

Lewis v. US Bank National Association, 188 So.3d 46 (Fla. 4th DCA 2016).........30

MaGaldi v. Deutsche Bank National Trust Co., 41 Fla. L. Weekly D1416b(Fla. 4th DCA June 15, 2016)...................................................................................25

Mitchell v. Hawley, 16, Wall 544, 21 L.Ed. 322, 83 U.S. 544, 550 (1872)............22

Ortiz v. PNC Bank, 188 So.3d 923 (Fla. 4th DCA 2016)........................................11

Ortiz v. PNC Bank, N.A., 41 Fla. L. Weekly D799 (Fla. 4th DCA March 30, 2016)......................................................................................................11

Peoples v Sami II Trust 2006-AR6, 178 So.3d 67 (Fla. 4th DCA 2015)..................11

Perez v. Deutsche Bank Nat. Trust Co., 174 So.3d 489, 491 (Fla. 4th DCA 2015)................................................................................................25

Reynolds v. Nationstar Loan Services, LLC, 190 So.3d 219 (Fla. 4th DCA 2016)................................................................................................31

Robelto v. U.S. Bank Trust, N.A., 41 Fla. L. Weekly D1076b (Fla. 4th DCA May 4, 2016)...................................................................................24

Russel v. Aurora Loan Services, LLC, 163 So.3d 639 (Fla. 2d DCA 2015)...........24

Russell v. Aurora Loan Services, 163 So.3d 639, 643 (Fla. 2d DCA 2015)...........27

SAS v. Federal National Mortgage Ass’n., 112 So.3d 778 (Fla. 2d DCA 2006)....33

Schmidt v. Deutsche Bank, 170 So.3d (Fla. 5th DCA 2015).............................11, 275

Seffar v. Residential Credit Solutions, Inc., 160 So.3d 122, 124 (Fla. 4th DCA 2015)....................................................................................................................17

Seidler v. Wells Fargo Bank, N.A., 179 So.3d 416 (Fla. 1st DCA 2015)...............30

Septimus v. Christiana Trust, 183 So.2d 471 (Fla. 4th DCA 2016)(........................33

Shores v. First Florida Resource Corp., 267 So.2d 696 (Fla. 2d DCA 1972)........35

Sorrell v. US Bank National Association, 41 Fla. L. Weekly D847 (Fla. 2d DCA April 6, 2016)...................................................................................23

Southern Baptist Hosp. of Fla. v. Welker, 908 So. 2d 317 (Fla. 2005).............32, 34

St. Clair v. U.S. Bank Nat’l. Assn., 173 So.3d 1045 (Fla. 2d DCA 2015)..............11

Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126 (Fla. 2000).........................................................................................................32, 34

Wolkoff v. American Home Mortgage Servicing, Inc., 153 So.3de 280 (Fla. 2d DCA 2014).....................................................................................................31, 36

FLORIDA STATUTES

Section 673.2011(1), Florida Statutes (2016). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Section 673.2031(1), Florida Statutes (2016). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Section 673.3011, Florida Statutes. (2016). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Section 673.3091, Florida Statutes (2016). . . . . . . . . . . . . . . . . . .10, 11, 15, 16, 19

6

STATEMENT OF FACTS AND CASE

This is a mortgage foreclosure case based upon reestablishment of a lost

promissory note.

On April 2, 2008, Plaintiff Bank of New York (through its attorney Marc

Brown with the law offices of David J. Stern, P.A.) filed a foreclosure action

against Defendants Jacinto Castellano and Elena Bettes (husband and wife)

seeking to reestablish a lost promissory note and to foreclose on a mortgage (R. 19-

42). There was no copy of the note attached. Instead there was a summary of the

terms of the note on the letterhead of EMC Mortgage Corporation (R. 42). Mr.

Castellano through his attorney filed a motion to dismiss for the following reasons:

1. The Plaintiff is not the original mortgagee.

2. The Plaintiff has alleged that it is the owner of the mortgagee but

has failed to attach a copy of any assignment of mortgage.

3. The Plaintiff acknowledges that it does not have the original

mortgage note.

4. The Plaintiff has alleged in its Count II of the Complaint seeking

to enforce the terms of the note that “a substantial copy” of the

mortgage is attached to the Complaint. The Plaintiff needs to

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attach a substantial copy of the promissory note if it is to

reestablish the promissory note, not a substantial copy of the

mortgage.

5. The Plaintiff has alleged none of the terms of the Promissory

Note except that the current interest rate is 8%, the payment

amount is $1,000.13 and the Promissory Note due date is 2007.

(See Exhibit “B” to the Complaint).

6. The alleged due date is repugnant to the mortgage which reflects

a due date of August 1, 2036.

7. The Plaintiff is asking the Court to enforce a mortgage and

promissory note without a showing of the Plaintiff’s right to

enforce the same, with not only little information to describe the

indebtedness but incorrect inforamtion as to the due date of the

indebtedness. (pp. 45-46).

Almost a year later Bank of New York (still represented by David Stern’s

office) filed a Notice of Filing Copies of the Original Note and Recorded

Assignment of Mortgage (pp. 47-74). Attached to the copy of the note is an

undated allonge by South Star Funding, LLC specifically endorsed to the Bank of

New York, as Trustee (p.74). The Defendants Jacinto Castellano and Elena Bettes

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(husband and wife) filed an answer (R. 76)

In March 2010, Plaintiff filed a motion for summary judgment (R. 78), but

never noticed it for hearing. Over a year later in May 2011, Plaintiff substituted

counsel (R. 89-95). Another year went by with no record activity.

In May 2012, Defendants filed a motion for substitution of counsel (R. 96),

which the trial court granted (R. 98). Defendants’ new counsel filed an Amended

Answer and Affirmative Defenses, raising several affirmative defenses including:

Failure to join the owner as an indispensable party

Lack of standing

Ultra Vires

Failure to register trust.

(R. 116 – 123). Plaintiff filed a motion to strike the affirmative defenses (R. 128-

140), which was denied on September 4, 2013 (R. 142).

The case was eventually scheduled for a nonjury trial on October 6, 2015 (p.

450). At trial plaintiff called Cynthia Stevens who is a case manager for Select

Portfolio Servicing, the servicer (p. 455). She testified as to what mortgage

servicing entails (p. 457), Select Portfolio’s record-keeping procedures (pp. 457-

458), the documents she reviewed (p. 459), and Select Portfolio’s boarding process

(pp. 460-462).

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Ms. Stevens identified as Select Portfolio’s business records:

Exhibit 1 a Limited Power of Attorney from J.P. Morgan Chase granting Select Portfolio the authority to service loans (pp. 255-271, identified and admitted into evidence at 463-465);

Exhibit 2 a copy of an adjustable rate note (pp. 272-278 identified and admitted into evidence at 466-472);

Exhibit 3 the recorded mortgage (pp. 279-299 and identified and admitted into evidence at 474-475);

Exhibit 4 a doc line report from the prior servicer Chase (pp. 300-303 identified and admitted into evidence at 475-477);

.Exhibit 5 a recorded assignment of mortgage (pp. 304-305 identified and admitted into evidence at 478-480);

Exhibit 6 a payment history (pp. 306-342 identifed and admitted into evidence at 482-486);

Exhibit 7 notice of default letter (pp. 343-345 identified and admitted into evidence at 486-488);

Exhibit 8 copy of the Pay 3 and Pay 4 screens from Select Portfolio’s computer system (pp. 346-348 identified and admitted into evidence at 491-492);

Exhibit 9 a hello letter from Select Portfolio to Mr. Castellano (pp. 349-352 identified and admitted into evidence at 493-494);

Exhibit 10 updated interest calculation (pp. 412-414 identified and admitted into evidence at 508).

Plaintiff’s counsel handed Ms. Stevens a copy of the proposed final

judgment. Ms. Stevens testified that the figures reflected were “a true and accurate

representation of the amounts claimed.” (pp. 494-495).

Judge Grube entered a final judgment of foreclosure on November 13, 2015

(pp. 415-424). The Castellanos filed a timely notice of appeal on December 9,

2015 (pp. 434-444).

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SUMMARY OF ARGUMENT

Select Portfolio Servicing failed to present evidence that it was entitled to

foreclose upon Mr. Castellano’s homestead. Although Bank of New York alleged

it was the holder of a negotiable instrument, its witness never testified Bank of

New York was a holder. Instead, Bank of New York’s witness was a case manager

for Select Portfolio Service who testified Select Portfolio was “the servicer” (p.

450).

Because the copy of the note filed with the court and submitted into

evidence was not a part of the original complaint, it was Bank of New York’s

burden to prove it could meet the requirements of reestablishing a lost note per

section 673.3091. The only evidence Select Portfolio Servicing relied upon was

screen shots showing Bank of New York received an original promissory note.

However, there was no evidence as to whether an original allonge was ever affixed

to the original promissory note. Nor was there any evidence as to when the allonge

was signed. Furthermore, there was no evidence as to when the promissory note

was lost or that Bank of New York had either actual possession or constructive

possession when the original promissory note was lost.

The trial court abused its discretion by allowing the plaintiff’s witness to

discuss the contents of business records that were not admitted into evidence.

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Such testimony is clearly inadmissible hearsay.

Finally, the trial court erred by not including in the judgment a provision for

adequate security in the event someone does eventually present and seeks to

enforce the original promissory note.

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I. Whether the Lower Tribunal erred by entering a judgment of foreclosure where Bank of New York failed to prove:

1. the promissory note was lost, 2. there was an original allonge attached to the

original note 3. Bank of New York was in construction possession when the note was lost,

4. Bank of New York had the right to enforce the promissory note when it was lost,

5. the loss of the promissory note was not the result of a transfer or lawful seizure,

6. there is no evidence linking the servicer to Bank of New York, and

7. there was no transfer of the chose in action from the previous servicer to the current one

Scope of Review

Normally, scope of review is competent, substantial evidence because the

trial court is in a better position to evaluate the weight and credibility of the

witness’s testimony. However, in these mortgage foreclosure cases the scope of

review is de novo because the evidence is totally based on documents, which this

Court has the equal ability to evaluate. E.g., Ortiz v. PNC Bank, 188 So.3d 923

(Fla. 4th DCA 2016); Ensler v. Aurora Loan Servs., LLC, 178 So. 3d 95, 97 (Fla.

4th DCA 2015); Peoples v Sami II Trust 2006-AR6, 178 So.3d 67 (Fla. 4th DCA

2015); St. Clair v. U.S. Bank Nat’l. Assn., 173 So.3d 1045 (Fla. 2d DCA 2015);

Schmidt v. Deutsche Bank, 170 So.3d (Fla. 5th DCA 2015); Boyd v. Wells Fargo

Bank, N.A., 143 So.3d 1128, 1129 (Fla. 4th DCA 2014); GMAC Mortg., LLC v.

13

Choengkroy, 98 So. 3d 781 (Fla. 4th DCA 2012).

Argument on the Merits

In order to foreclose a mortgage, a person must prove it has the right to

enforce the underlying debt. A person entitled to enforce a negotiable instrument

is:

(1) The holder of the instrument;(2) A nonholder in possession of the instrument who has the

rights of a holder; or(3) A person not in possession of the instrument who is entitled

to enforce the instrument pursuant to s. 673.3091 or s. 673.4181(4).

§673.3011, Fla. Stat. (2016).

In this case, Bank of New York proceeded with subsection (3) by seeking to

reestablish a lost promissory note per section 673.3091, which requires a plaintiff

to prove three things:

(a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

14

§ 673.3091(1), Florida Statutes (2015). Here, the Bank of New York failed to

prove all three elements.

a. Appellee failed to prove it was entitled to enforce the promissory note when the loss of possession occurred or has acquired ownership of the lost promissory note from a person who was entitled to enforce the promissory note when the loss occurred

Regarding element (a), the Complaint alleged in paragraph 18(a) that the

Bank of New York “was in possession” and was “was entitled to enforce” the note

when it was lost (p. 20) First of all, Bank of New York failed to present any

evidence that the promissory note was even lost. Exhibit 4 contains the date of

July 31, 2007, when the original note was placed in a vault managed by Chase (p.

500). It did not show any date as to when the promissory note was removed. It

showed that on July 10, 2009, the law firm of Connolly Geany Ablitt & Willard

(Ablitt) had possession of the promissory note (p. 500).

When asked what steps she took to locate the note, Ms. Stevens stated:

A. I reviewd the – the complaint, found that it had a lost note count. I then looked – on the docket for the County. It said that something had been filed. When we looked in the court file, it was a copy of the original document. I then checked the Chase – or the – in our imaging system, the Chase doc line report. (p.467).

She did not say anything about contacting Ablitt. When asked if she had

any personal knowledge as to when the promissory note was lost, Ms. Stevens 15

answered:

A. The promissory note was lost after it was received by Ablitt law firm in 2011, I believe. The actual date is on one of the exhibits. They received the document. Ablitt’s office after that date, they went out of business, and the document was never received bak from them. (p. 509).

The fact that she could not locate in her employer’s file does not constitute

proof it was lost. Figueroa v. Fed. Nat’l Mortg. Ass’n, 180 So.3d 1110 (Fla. 5th

DCA 2015)(witness’s testimony that “the note was not in the file” was insufficient

to prove it had been lost).

Furthermore, it is clear this testimony is not based on her personal

knowledge because Ms. Stevens admitted she never worked for Ablitt or ever went

to their office (pp. 509-510). It is also interesting to note that Ms. Stevens did not

testify that she ever attempted to contact Ablitt or any of its successors in interest.

Her knowledge was based solely on Exhibit 4 which did not even contain

any information as to when the original promissory note was sent to Ablitt, but

only the date they received it.

Q. Do you have any knowledge -- okay. Your explanation was, is that there was an entry that the promissory note was sent to them?

A. No, that they received it. (p. 510).

Ms. Stevens admitted the sole basis for this knowledge was Exhibit 4, which

did not mention anywhere anything about an allonge.

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Q. And [Exhibit 4] shows that the promissory note was delivered to – put in the vault when?

A. January 31st of ’07.Q. Okay. And is there anything to indicate any – anything in

the record that says – indicate anything about an allonge?A. Well, no, sir. That would be part of the note. It would not

be separate.Q. But you can’t tell from that whether or not there an allonge

on that note.A. Well, I also can’t tell that there wasn’t.Q. Right. That’s the point. It doesn’t indicate anything about

an allonge, is that correct?A. It indicates that the note input into the vault on January 31st

of ’07. There’s no reason for me to believe that the allonge was not part of the document.

Q. Yeah, but you don’t know – but that record doesn’t indicate whether or not the allonge was attached to the note when it was put into the vault; isn’t that correct?

A. Correct (pp. 499-500)* * * *

Q. Is there any mention in Exhibit 4 about an allonge?A. The note and allonge would have been together.Q. No, that’s not my question. My question is: Is there

anything in Exhibit 4 that mentions the allonge?A. The note and allonge would have been together. If they had

been separate, there would be another entry in the Doc Line report for an allonge.

Q. Okay.A. But because they were together, there is no entry for the

allonge.Q. Do you know if – what knowledge do you have that there

was an along on the note?MR. McDONALD: Objection, asked and answered.THE COURT: Overruled.A. I’m sorry. Say it one more time.MR. REDER: Well that document mentions a note. You’re

saying there was an allonge attached to it, and I’m asking: What documents, what exhibit have you introdued that show that there was

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an allonge attached to the note?A. Exhibit number 4.Q. Okay. And that’s the only exhibit you’re relying on?A. Correct (p. 511)

The screen shot is insufficient evidence to support a judgment because it

contains no information that 1) the promissory note was lost, 2) an allonge was

affixed to the note when it was received by Chase, 3) the reason why Ablitt

received the promissory note, 4) an allonge as affixed to the promissory note when

Ablitt received it, and 5) the promissory note was still not in possession by Ablitt

or any of its succesors in interest

Even assuming the promissory note is lost, Bank of New York was required

to prove it “was entitled to enforce the promissory note when the loss of possession

occurred, or has directly or indirectly acquired ownership of the instrument from a

person who was entitled to enforce the instrument when loss of possession

occurred.” § 673.3091(1)(a), Fla. Stat. (2016).

In order to prove it was entitled to enforce the promissory note when the

promissory note was lost, Bank of New York necessarily needed to prove it

acquired the right to enforce the promissory note when it received it in 2007. The

Bank could do this by showing either it became a holder or it acquired the rights of

a holder when it obtained possession. The Bank failed to present any evidence to

support either element.18

In order to prove it became the holder when it received the promissory note,

the Bank had to prove it received the original note with an original allonge affixed

to it. Again there is nothing in Exhibit 4 to indicate there was an allonge affixed to

the note.

This case is on all fours with Seffar v. Residential Credit Solutions, Inc., 160

So.3d 122, 124 (Fla. 4th DCA 2015). In Seffar, the court noted:

At trial, a litigation manager for Bayview testified. He was not a records custodian for RCS or for Bayview. He was not familiar with the computer systems that either of the prior servicers, CitiMortgage and RCS, used for compiling information on the loan or how it was inputted into the systems. He had no information as to whether the information on the loans was inputted into the prior servicers’ systems correctly. He could not testify to the truth or accuracy of RCS’s records, just that they were provided to Bayview. He testified that Bayview was the servicer and holder of the note. He believed that Bayview had acquired the note through a purchase agreement with RCS, but he had not seen the agreement, nor did he have a copy of it. His belief that Bayview was the owner of the note under the purchase agreement was based on “a screen shot of our capital assets systems, which has information in regards to the status of the loan with us.”

Seffar v. Residential Credit Solutions, Inc., 160 So.3d at 124.

The court reversed the final judgment of foreclosure noting:

A nonholder in possession, however, cannot rely on possession of the instrument alone as a basis to enforce it.... The transferee does not enjoy the statutorily provided assumption of the right to enforce the

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instrument that accompanies a negotiated instrument, and so the transferee “must account for possession of the unendorsed instrument by proving the transaction through which the transferee acquired it.” Com. Law § 3–203 cmt. 2. If there are multiple prior transfers, the transferee must prove each prior transfer. Once the transferee establishes a successful transfer from a holder, he or she acquires the enforcement rights of that holder. See Com. Law § 3–203 cmt. 2. A transferee’s rights, however, can be no greater than his or her transferor’s because those rights are “purely derivative.”

Murray, 157 So.3d at 358 (emphasis in original) (internal citations omitted). Because HSBC did not offer evidence of one of the prior transfers of the note, we held it did not prove that it was a nonholder in possession.

Seffar v. Residential Credit Solutions, Inc., 160 So.3d 122, 126 (Fla. 4th DCA

2015).

A close reading of Exhibit 4 shows that the word allonge is never

mentioned. The failure of proving an original allonge was affixed to the original

promissory note is critical. Because there was no evidence that an original allonge

was affixed to the original note, Plaintiff failed in its burden it had the right to

enforce the note.

Florida's Uniform Commercial Code does not specifically mention an allonge, but notes that "[f]or the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is part of the instrument." § 673.2041(1), Fla. Stat. (1995).

Booker v. Sarasota, Inc., 707 So. 2d 886 (Fla. 1st DCA 1998). An allonge that is

20

not affixed to the original promissory note cannot be considered a signature on the

instrument. See Lamson v. Commercial Credit Corp., 531 P.2d 966, 967 (Col.

1975)(“We agree with the Court of Appeals' statement that a separate paper pinned

or paper-clipped to an instrument is not sufficient for negotiation.”)

The reason for the affixation requirement was best explained by the court in

Adams v. Madison Realty & Development, Inc., 853 F.2d 163 (3d Cir. 1988):

The affixation requirement has also been cited for its utility in preserving a traceable chain of title, thus furthering the Code's goal of free and unimpeded negotiability of instruments. Nearly a century ago, the Supreme Court of Georgia declared it "indispensably necessary" that negotiable instruments "should carry within them the indicia by which their ownership is to be determined; otherwise, their value as a circulating medium would be largely curtailed, if not entirely destroyed." Haug v. Riley, 101 Ga. 372, 29 S.E. 44, 46 (1897). See also Crosby, 16 Wis. at 627 (permanently attached indorsements to instrument "travel with it wherever it might go"). Chancellor Hawkland writes that it would be "unreasonable to impose upon the indorsee the risk that the present holder or a prior holder had negotiated the instrument to someone not in the apparent chain of title by virtue of a separate document." 4 W. Hawkland & L. Lawrence, Uniform Commercial Code Series § 3-202:05 (1984).

Even if the allonge was affixed to the note, plaintiff failed to prove that (1)

there was a transfer of possession to it by someone other than the issuer, or (2) that

the transfer of possession was done for the purpose of giving the right to enforce.

The first requirement is dictated by section 673.2011(1), Florida Statutes (2016)

which defines negotiation to mean “a transfer of possession, whether voluntary or

21

involuntary, of an instrument by a person other than the issuer to a person who

thereby becomes its holder.” The second requirement is dictated by section

673.2031(1), Florida Statutes which states an instrument is “transferred” when it is

“delivered . . . for the purpose of giving to the person receiving delivery the right to

enforce the instrument.”

At no point did Ms. Stevens ever testify Bank of New York became the holder

when the promissory note was delivered to it. Such failure alone justifies a

reversal. See Fiorito v. JP Morgan Chase Bank, 174 So.3d 519 (Fla. 4th DCA

2015)(trial court erred by entering a final judgment of mortgage foreclosure

because plaintiff’s witness did not testify plaintiff was the holder); Seffar v.

Residential Credit Solutions, Inc., 160 So.3d 122 (Fla. 4th DCA 2015)(judgment of

mortgage foreclosure reversed where plaintiff alleged it was the holder, but its

witness consistently testified it brought the suit as the servicer).

To prove status as a holder, the plaintiff must also approve that when

it acquired possession of the note, there was an endorsement in blank.

When that endorsement is by means of an allonge, there must be evidence.

that the original allonge was affixed to the original note.

Though the copy of the note and the allonge attached to the complaint indicate that the note was transferred to U.S. Bank, U.S. Bank never filed the original allonge. "In order to prevail in a suit on a note and mortgage, the original note and mortgage must be introduced into

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evidence or a satisfactory reason must be given for failure to do so." Fair v. Kaufman, 647 So. 2d 167, 168 (Fla. 2d DCA 1994). Because an allonge is essentially part of the note, see Isaac v. Deutsche Bank Nat'l Trust Co., 74 So. 3d 495, 496 n.1 (Fla. 4th DCA 2011), it was necessary for U.S. Bank to file the original allonge along with the original note.

Caballero v. U.S. Bank National Association, 189 So.3d 1044, 1045-1046

(Fla. 2d DCA 2016).

The plaintiff is also required to prove when the allonge was signed.

In this case Ms. Stevens admitted she had no knowledge as to when the

copy of the allonge introduced into evidence was signed.

Q. Okay. And looking at the allonge to the note, is there any information showing when that allonge was signed?

A. No, sir, it’s not dated.Q. Okay. Do you have any knowledge or is there

anything in the – in any of the business records which indicate when that allonge was signed?

A. No, sir. (pp. 498-499)

This admission alone is sufficient to show that Bank of New York did

not meet its burden of proving standing. E.g., Cruz v. JP Morgan Chase

Bank, 41 Fla. L. Weekly D1412a (Fla. 4th DCA June 15, 2016)(judgment of

foreclosure because “witness did not testify to when the allonge was attached to the

note or when the endorsement occurred.”); Peoples v Sami II Trust 2006-AR6, 178

So.3d 67, 70 (Fla. 4th DCA 2015)(judgment of mortgage foreclosure reversed

because “the Trust’s witness did not know when the endorsement was placed on 23

the note”).

The requirement of possession as a holder also applies to one’s

predecessor’s because an assignee cannot acquire any greater rights that an

assignor.

The property not having vested in the Ashmeads, though delivered to them, they could not sell what they did not own, nemo dat quod non habet. In this case, if we were to hold that a bona fide purchaser from a purchaser in possession from a seller who reserved title until payment of purchase money, took a good title, it would not benefit the defendant in this case. He is in no sense a bona fide purchaser. He can have no greater rights in the property than the Ashmeads, whose assignee he is.

Campbell Printing Press Manuf’g Co. v. Walker, 22 Fla. 412, 421, 1 So. 59, 64-65

(1886).

No one in general can sell personal property and convey a valid title to it unless he is the owner or lawfully represents the owner. Nemo dat quod non habet. Persons, therefore, who buy goods from one not the owner, and who does not lawfully represent the owner, however innocent they may be, obtain no property whatever in the goods, as no one can convey in such a case any better title than he owns, unless the sale is made in market overt, or under circumstances which show that the seller lawfully represented the owner.

Mitchell v. Hawley, 16, Wall 544, 21 L.Ed. 322, 83 U.S. 544, 550 (1872)(footnote

omitted).

Appellee is bound to argue that Ablitt had received the note for the purpose

of enforcing it on behalf of Bank of New York. However, there is absolutely no

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evidence that the Ablitt law firm was an attorney for Chase, the Bank of New York

or Select Portfolio Systems.

Moreover, the Florida Supreme Court held in the case of Chestnut v.

Robinson, 85 Fla. 87, 95 So. 428 (1923) that possession of endorsed notes by one’s

attorney does not establish possession by the client.

Appellees would have us presume that because Mrs. Robinson's attorneys had possession of the notes after their execution, they delivered them to Mrs. Robinson, and upon this presumption presume that she had possession at the time of the institution of the suit, three and a half years thereafter. Nothing is more clearly settled that a presumption cannot rest upon a presumption.

Id. at 89-90.

Hence, the only evidence presented was a screen shot showing that the

original promissory note (with no mention of an allonge) was received by Ablitt on

July 10, 2009 (p. 500). Evidence of transfer of possession of a promissory note

(even if endorsed in blank) is insufficient to prove holdership. Sorrell v. US Bank

National Association, 41 Fla. L. Weekly D847 (Fla. 2d DCA April 6, 2016)

(mortgage foreclosure judgment reversed because “the indorsement was undated”)

In this case, it is just as conceivable that the law firm accepted delivery of the

promissory note on the behalf of some other entity and for some purpose other than

enforcing the note. In either case, the law firm would not be a person in

possession with the rights of a holder.25

Nor was there any evidence that Select Portfolio Servicing is authorized by

Bank of New York to foreclose on the mortgage. Because of Ms. Stevens’s

testimony that Select Portfolio Servicing was the servicer, it was incumbent upon

Select Portfolio Servicing to present evidence of authorization to pursue a

foreclosure action. In Russel v. Aurora Loan Services, LLC, 163 So.3d 639, 643

(Fla. 2d DCA 2015), this Court reversed a final judgment of foreclosure after a

nonjury trial because the plaintiff servicing company failed to present any evidence

that it was authorized to bring the suit stating:

In this case, as in Elston/Leetsdale, Aurora alleged and verified as true that it was the loan servicer and had authority to bring the foreclosure action. Aurora did not allege upon what authorization it acted. Nor did Aurora attach to the complaint or file of record “any evidence, affidavits[,] or other documents, supporting its allegation that it was authorized to prosecute the Boglioli action on behalf of the trust.” See Elston/Leetsdale, 87 So. 3d at 17.

Select Portfolio Servicing attempted to get around this by Ms. Stevens

testifying that the original servicer was EMC which then merged with Chase (pp.

459-460). However, this testimony was not based on personal knowledge and none

of the exhibits introduced into evidence mentioned EMC or established there was a

merger.

This case is on all fours with Robelto v. U.S. Bank Trust, N.A., 41 Fla. L.

Weekly D1076b (Fla. 4th DCA May 4, 2016). In that case

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The representative stated that the “prior loan servicer” had possession of the note when the case was filed, but she only “believed” that because the complaint was filed. She had no personal knowledge of this, and thus her testimony is solely based upon any business records which might show possession. The waybill showed not that Wells Fargo was in possession, but that HSBC was in possession and transferred it to its attorney, not Wells Fargo.

The Court reversed because “there was no proof of the connection between HSBC

and Wells Fargo.” Similarly, in this case there is no proof of the connection

between Chase and the Bank of New York.

In short, Bank of New York fell woefully short of it was entitled to enforce

the lost promissory note. E.g., Home Outlet, LLC v. U.S. Bank National

Association, 41 Fla. L. Weekly D1490a (Fla. 5th DCA June 24, 2016)(evidence

insufficient as it was based on lost note affidavit not submitted into evidence and

affidavit itself was insufficient as it did not specify prior servicer was entitled to

enforce the note); MaGaldi v. Deutsche Bank National Trust Co., 41 Fla. L.

Weekly D1416b (Fla. 4th DCA June 15, 2016)(“Evidence of a transfer of the note

into a trust is not, standing alone, sufficient to establish standing at inception of the

suit.”); Cruz v. JP Morgan Chase Bank, 41 Fla. L. Weekly D1412a (Fla. 4th DCA

June 15, 2016)(judgment of foreclosure because “witness did not testify to when

the allonge was attached to the note or when the endorsement occurred.”); Perez v.

Deutsche Bank Nat. Trust Co., 174 So.3d 489, 491 (Fla. 4th DCA 2015)(judgment

27

of mortgage foreclosure reversed because “the Bank's only witness was unable to

testify as to when the note was endorsed, and the PSA was not introduced into

evidence”); Deutsche Bank National Trust Co. v. Boglioli,   154 So.3d 494, 495

(Fla. 4th DCA 2015)(bank failed to establish standing where the bank introduced

an undated blank endorsement because the bank's only witness was unable to

testify as to when the note was endorsed, and the bank failed to introduce a PSA

through which the bank claimed it acquired the assignment of the note); Jelic v.

LaSalle Bank, Nat'l Ass'n,   160 So.3d 127, 130 (Fla. 4th DCA 2015) (reversing a

final judgment of foreclosure, in part because there was no evidence that the party

transferring the note into a trust had any intent to transfer an interest to the trustee).

Appellee is also bound to argue that Select Portfolio has the authority to

maintain this foreclosure suit because of the two limited powers of attorney

introduced into evidence as Exhibit 1 (pp. 255-271). However, these powers of

attorney do not reference the Plaintiff Bank of New York, are dated after the initial

complaint was filed, and do not mention David Stern’s office which was the firm

that filed the initial complaint (p. 497).

In a case factually similar to this one, this Court reversed a judgment of

foreclosure because the power of attorney had the same defects.

Nationstar contends, as it did at trial, that the POA sufficiently establishes Aurora’s standing at the time the foreclosure suit was

28

filed. However, as previously noted, the POA is dated some eighteen months after the complaint was filed, grants limited powers to Nationstar only, and does not indicate the dates which Aurora previously acted as servicer for Deutsche Bank. Nor does it indicate that Aurora held a similar POA or was otherwise given the same limited powers granted to Nationstar. Cf. One W. Bank, F.S.B.v.. Bauer, 159 So.3d 843 (Fla. 2d DCA 2014) (granting petition for writ of certiorari and noting that powers of attorney for both the original servicer and successor servicer were introduced into evidence), rev. denied, 157 So.3d 1041 (Fla.2014). Nationstar’s evidence established that it was the current loan servicer for Deutsche Bank; it did not prove that Aurora had standing as a prior servicer. See Murray v.. HSBC Bank USA, 157 So.3d 355, 358–59 (Fla. 4th DCA 2015).

Russell v. Aurora Loan Services, 163 So.3d 639, 643 (Fla. 2d DCA 2015).

Next Appellee will argue it has standing by virtue of an assignment of

mortgage introduced into evidence as Exhibit 5 (pp. 304-305). This assignment of

mortgage is dated March 19, 2008. Ms. Stevens testified it also assigned and

delivered the promissory note (p. 480). This date is inconsistent with Exhibit 4

which Ms. Stevens claimed to show the promissory note was delivered to Plaintiff

on July 31, 2007 and then received by Ablitt on July 10, 2009. And, just like

Exhibit 4, there is not mention of an allonge. Since the original complaint averred

that the promissory note had been lost, it was “incumbent upon Bank to present

competent evidence at trial to explain how it became a holder of the note prior to

suit being filed.” Schmidt v. Deutsche Bank, 170 So.3d 938, 941 (Fla. 5th DCA

2015).

29

Schmidt v. Deutsche Bank also held that evidence a promissory note was

delivered to the custodian of a trust did not prove the depositer “had the intent to

transfer any interest in the note to the Bank, as trustee.” Id. at 941.

Finally, even if this Court finds there has been valid transfers of assignments

of note or mortgage, such is not sufficient to show a transfer of the right to

continue this foreclosure suit. Assigning a note or mortgage is not the same as

assigning a chose in action. There must be evidence of an assignment of a chose in

action.

The Assignment of Mortgage is, as it states, an assignment of all of the RTC's rights and interests in the mortgage and related collateral. The Assignment of Mortgage makes no mention of, or attempt to, assign to Lennar any cause of action held by the RTC. In order for Lennar to pursue an action based on a cause of action held by the RTC Lennar must allege a valid assignment of that cause of action from the RTC. Lennar has failed to allege, and the exhibits attached to the amended complaint do not demonstrate, that the assignment from the RTC, gave Lennar any right to prosecute any cause of action previously held by the RTC. Since Lennar did not, and cannot, allege a valid assignment the amended complaint fails to allege a cause of action upon which relief may be granted.

Ginsberg v. Lennar Florida Holdings, Inc., 645 So.2d 490 (Fla. 3d DCA 1994).

(b) Appellee failed to present any evidence that the loss of possession was not the result of a transfer by the person or a lawful seizure

Ms. Stevens failed to give any testimony that the loss of possession was not

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the result of a transfer by the person or a lawful seizure. She simply testified that

the promissory note was not returned to Chase. Indeed her explanation was that

the Ablitt law firm went out of business after it had received the note (pp. 509-

510). This testimony actually supports the notion that the loss of possession was

the result of a transfer or a lawful seizure. It is quite likely that the original

promissory note was seized by one of Ablitt’s creditors or was transferred to a

bankruptcy trust or receiver.

c. Appellee failed to present any evidence that it could not reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts could not be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

Regarding element (c), the Complaint alleged that the Bank “cannot reasonably

obtain possession of the promissory note because its whereabouts cannot be

determined.” (p. 20) But as noted above, Ms. Stevens failed to give any testimony

that the Bank of New York made any effort to obtain the note from the law firm, or

even contact the firm to determine whether the note was still in the law firm’s

possession. The fact the firm went out of the business is evidence that its receiver

or some third-party creditor obtained possession of the original promissory note.

This possibility alone requires reversal in this case.

In a similar case, Seidler v. Wells Fargo Bank, N.A., 179 So.3d 416 (Fla. 1st 31

DCA 2015), the plaintiff’s witness said “yes” when asked whether the plaintiff

“attempted to search for the original documents” and was “unable to locate the

same.” Id. at 420. The First District held that the “bare affirmation” was

insufficient to prove “entitlement to reestablish a lost note.” Id. at 421.

In Boumarate v. HSBC Bank USA, N.A., 172 So.3d 535, 536 (Fla. 5th DCA

2015), the bank’s witness

admitted that she did not know who lost the note or when it was lost. She could not say whether the copy of the note that was lost contained an endorsement, allonge, or assignment. She did state that the transfer from Novelle to the Bank would be documented by the “PSA”1 and any mortgage trust securities, which is “public knowledge.” However, those documents were never introduced into evidence. She also admitted that, in the documents she had seen during trial, nothing showed a transfer of the note from Novelle to the Bank.

The court found the evidence was insufficient and reversed the final judgment of

foreclosure.

In the case Lewis v. US Bank National Association, 188 So.3d 46 (Fla. 4th

DCA 2016), the Fourth District Court of Appeal reversed a final judgment of

mortgage foreclosure, stating in a one paragraph opinion:

In 2008, appellee bank filed a foreclosure action and included a count seeking to reestablish a lost note. No copy of the original note was attached to the complaint. The case went to trial in 2014. The endorsements on an allonge to the note were undated and the bank’s witness could not testify when the endorsements were placed on the allonge. The bank’s reliance on a pooling and servicing agreement was insufficient to establish the bank’s standing to bring suit at the

32

time the suit was filed. See Jarvis v. Deutsche Bank Nat’l Trust Co., 169 So. 3d 194, 196 (Fla. 4th DCA 2015); Balch v. Lasalle Bank N.A., 171 So. 3d 207, 209(Fla. 4th DCA 2015); Perez v. Deutsche Bank Nat’l Trust Co., 174 So. 3d 489, 491 (Fla. 4th DCA 2015).

Accordingly, the Bank failed to present competent substantial evidence to

establish its claim to enforce a lost note. The judgment must be reversed and

remanded for entry of involuntary dismissal. E.g., Reynolds v. Nationstar Loan

Services, LLC, 190 So.3d 219 (Fla. 4th DCA 2016); Figueroa v. Fed. Nat’l Mortg.

Ass’n, 180 So.3d 1110 (Fla. 5th DCA 2015); Wolkoff v. American Home Mortgage

Servicing, Inc., 153 So.3d 280 (Fla. 2d DCA 2014); Correa v. U.S. Bank Nat’l.

Ass’n., 118 So.3d 952 (Fla. 2d DCA 2013);

33

II. Whether the trial court erred by allowing Bank of New York’s witness to testify as to matters that were not contained in any of the documents submitted into evidence as a business records exception to the hearsay rule.

Scope of Review

Since the issue is one of question of law which does not involve reweighing

of evidence, de novo is the standard of review. E.g., Fla. Bar v. Greene, 926 So.

2d 1195 (Fla. 2006); Southern Baptist Hosp. of Fla. v. Welker, 908 So. 2d 317 (Fla.

2005); Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126 (Fla.

2000).

Argument on the Merits

Ms. Stevens’s testimony that servicing of the loan went from EMC to Chase

and from Chase to Select Portfolio was based on records she had seen that were no

introduced into evidence. Ms. Stevens specifically testified:

Q. Now, was Select Portfolio Servicing always a servicer of this loan?

A. No, sir. Review of the business records shows that the original – the original servicer was EMC. EMC then merged with Chase, and Chase then services transferred the loan to Select Portfolio in 2014. (pp. 459-460).

Defense counsel vociferously objected and moved to strike.

MR. REDER: Your Honor, I would like to move to strike. She shouldn’t be allowed to testify that anything except the exhibits that are already been admitted into evidence. She should not be allowed to testify about things that’s she’s seen of business records that have not

34

been introduced as evidence. (p. 462).

Judge Grube denied the motion (R. 462).

Judge Grube abused his discretion in denying the motion to strike. A witness

cannot testify about the contents of business records that are not admitted into

evidence. E.g., Cardona v. Nationstar Mortg., LLC, 174 So.3d 491 (Fla. 4th DCA

2015); Beauchamp v. Bank of New N.Y., 150 So.3d 827 (Fla. 4th DCA 2014); SAS

v. Federal National Mortgage Ass’n., 112 So.3d 778 (Fla. 2d DCA 2006); see also

Septimus v. Christiana Trust, 183 So.2d 471 (Fla. 4th DCA 2016)(bank failed to

submit evidence of “FDIC’s assignment of the note and mortgage to its

predecessor before the complaint was filed”).

35

III . Whether the lower tribunal erred by not requiring Bank of New York to provide adequate security in the event the entity that now possesses the original note seeks to enforce it.

Scope of review

Since the issue of whether the lower tribunal erred by not requiring Plaintiff

to provide adequate protection in the even the original promissory note does show

up a question of law, de novo is the standard of review. E.g., Fla. Bar v. Greene,

926 So. 2d 1195 (Fla. 2006); Southern Baptist Hosp. of Fla. v. Welker, 908 So. 2d

317 (Fla. 2005); Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So.2d

126 (Fla. 2000).

Argument on the merits

Judge Grube erred by not providing for adequate protection in the event the

entity that now possesses the original note seeks to enforce it.

However, the trial court made no provision for adequate protection of the Blitches in the final judgment, nor did it determine that adequate protection was unnecessary in this case. This omission requires us to reverse the final judgment and remand for further proceedings, at which the court must address the means by which the Bank must satisfy this post-proof condition.

Blitch v, Freedom Mortgage Co., 185 So.3d 645, 646-647 (Fla. 2d DCA 2016).

36

The Castellanos “are entitled to assurance that they will not later be sued by

a holder of these instruments.” Shores v. First Florida Resource Corp., 267 So.2d

696 (Fla. 2d DCA 1972).

37

CONCLUSION

Because Select Portfolio Servicing failed to meet its burden of proving it had

the right to enforce the promissory note and because the lower tribunal erred in

denying Mr. Castellano’s motion to include an indispensable party, this Court

should reverse and remand with instructions to the lower tribunal to enter a

judgment of involuntary dismissal. E.g., Peoples v Sami II Trust 2006-AR6, 178

So.3d 67, 70 (Fla. 4th DCA 2015); Wolkoff v. American Home Mortgage

Servicing, Inc., 153 So.3d 280 (Fla. 2d DCA 2014); Correa v. U.S. Bank Nat’l.

Ass’n., 118 So.3d 952 (Fla. 2d DCA 2013).

Respectfully submitted,

/s/_________________________ Randall O. Reder, P.A.Florida Bar No. 2642101319 W. Fletcher Ave.Tampa, FL 33612-3310Phone(813) 960-1952Email reder@redersdigest.comSec. email ABoucher@ERRofTampa.comSDennis@ERRofTampa.com

38

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing has been sent by electronic mail

on June 6, 2016, to Weitz & Schwartz, P.A., 900 SE Third Avenue, Suite 204,

Fort Lauderdale, FL 33316 (sarahweitz@weitzschwartz.com and

stevenweitz@weitzschwartz.com) and to SHD Legal Group, P.A., PO Box 19519,

Fort Lauderdale, FL 33318 (answers@shd legalgroup.com).

I hereby certify that this brief has been prepared using New Times Roman

14-point font in compliance with Florida Rule of Appellate Procedure 9.100(l).

/s/Randall O. RederRandall O. Reder, Bar No. 2642101319 West Fletcher AvenueTampa, FL 33612Phone 813-960-1952Fax 813-265-0940reder@redersdigest.comABoucher@ERRofTampa.com

SDennis@ERRofTampa.com

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