MIAMI, FL – May 1, 2017 – ECC Team Takes on Bank Before Florida Supreme Court and Prevails
Ehrenstein Charbonneau Calderin’s team handles case at multiple levels
Picture this: You’re a homeowner. You’re current on your mortgage, including your homeowners’ insurance. A devastating fire destroys the house. The insurance company pays to put things back together. But what if your lender tries to change the rules of the game in the middle of everything, and they take your home?
Recently, attorneys Latasha Johnson and Nicole Grimal Helmstetter addressed these complex issues for the Chapter 7 Trustee of a personal bankruptcy estate, which was the result of protracted litigation between the lender, Ocean Bank and the debtor/borrower.
Ocean Bank collected on the insurance proceeds that were intended to rebuild the debtor/borrower’s house. With the reconstruction underway, the borrower and Ocean Bank entered into a Loan Modification Agreement. Later, based on an appraiser’s estimate that fixing the house would cost more than the insurance proceeds, Ocean Bank sued to foreclose and the borrower counterclaimed and sought attorneys’ fees. Ocean Bank asserted that by entering into a loan modification, the borrower had waived defenses and rights included in the prior loan documents. Ocean Bank prevailed at the trial level and the property was subsequently sold.
The borrower took the case to the Third District Court of Appeals, where the trial court’s decision was reversed, but the bank did not accept the ruling and petitioned the Florida Supreme Court. By that time, the borrower was forced to file for Chapter 7 bankruptcy protection.
Representing the Bankruptcy Trustee, ECC took over the civil litigation and prepared a winning strategy before the Florida Supreme Court. “We knew that the facts of our case did not support a waiver. It was a technical point, but it made all the difference,” said Johnson. “We demonstrated that there wasn’t any conflict between the Third District Court of Appeal’s ruling in favor of the borrower and a Second District Court of Appeal case that Ocean Bank relied upon.” On March 30, the Florida Supreme Court ruled against Ocean Bank and preemptively denied rehearing on any grounds. The case now returns to the trial court where ECC’s litigation team will continue with its representation of the Trustee in the shoes of the borrower.
“This victory cautions lenders to beware when they modify mortgages, and to expressly include waiver of prior defense language,” Grimal Helmstetter said. “If you enter into a modification of an agreement and you want to establish a waiver of a party’s rights or their ability to raise affirmative defenses and counter claims in the future, you need to state it expressly in the document. It needs to be addressed head-on. A bank cannot rely upon previous documents, as in this case, the original mortgage documents, to imply any waiver whatsoever.”
“This was a David and Goliath scenario, where Ocean Bank had all the strength and power that comes with being a big bank,” Johnson stated. “Due to ECC’s versatility and team culture, we are able to manage complex cases such as this, at all jurisdictional levels, by tapping into our diverse practice experience including litigation, appeals, negotiations, and bankruptcy,” added Grimal Helmstetter.
Ehrenstein Charbonneau Calderin is a law firm based in Miami, Florida. The firm and its attorneys serve their clients in the areas of business restructuring, dispute resolution, and real estate.