Constitutional Role of Judges

Justice Scalia and Justice Breyer testified before the Senate Judiciary Committee yesterday. C-SPAN's summary and video of the testimony is below:

Justices Breyer and Scalia testified on the role of judges in the American republic and democratic systems within the U.S. Question topics included the politicization of the judicial confirmation process, cameras in the courtroom, the role of juries, and the 14th Amendment.

Eleventh Circuit To Review Two Fair Sentencing Act Cases En Banc

The Eleventh Circuit released two opinions today granting en banc review in criminal cases relating to the Fair Sentencing Act. See HERE and HERE.

In U.S. v. Rojas, the court will consider the appeal en banc and vacated the panel's opinion released on September 7, 2011 and published at 645 F.3d 1234. That order granting en banc review is available HERE. The now vacated panel opinion in this appeal began:

Arthur Smith appeals his 127-month sentence after pleading guilty to possession with intent to distribute 50 grams or more of cocaine base, in violation of 21 U.S.C. § 841(a)(1). He contends that an intervening decision shows that the district court erred by failing to apply the Fair Sentencing Act of 2010 (FSA) in determining his sentence. The government responds that, regardless of the merit of Smith's contention, he waived his right to appeal his sentence and that waiver covers this claim. We hold that FSA claims, like any other type of sentence claim, can be waived by a knowing and voluntary appeal waiver.

In U.S. v. Hudson, the court will consider the appeal en banc and vacated the panel's unpublished opinion released on May 11, 2011. The panel opinion is available HERE and the order granting en banc review is available HERE. This panel opinion began:

Charles Levern Hudson appeals his 240-month, mandatory-minimum sentence for (1) possession with intent to distribute 50 grams or more of cocaine base, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(A)(iii), and (2) possession with intent to distribute 5 grams or more of cocaine base, in violation of § 841(a)(1), (b)(1)(B)(iii). He argues that the Fair Sentencing Act of 2010 (“FSA”), Pub. L. No. 111-220, 124 Stat. 2372 (2010), which was enacted after his offense conduct and conviction but before his sentencing, retroactively lowered the statutory mandatory minimum sentence for his offense. In particular, he contends that our statement to the contrary in United States v. Gomes, 621 F.3d 1343 (11th Cir. 2010), cert. denied, (U.S. Apr. 4, 2011) (No. 10-9271), is dicta that we are not obligated to follow here. For the reasons set forth below, we affirm.

Foreclosure Summary Judgment Reversed Due To Standing And Failure To Seek Relief Granted

In Gee v. U.S. Bank (5D10-1687), the Fifth District reversed a judgment in favor of U.S. Bank "Because U.S. Bank’s motion did not address any facts or law pertaining to its entitlement to summary judgment on its claims to reestablish the lost instruments and reform the deed and mortgage, the trial court erred in entering summary judgment on these grounds."

U.S. Bank filed a foreclosure complaint seeking to foreclose on a mortgage and reestablish a lost note. Subsequently, U.S. Bank filed a motion for summary judgment that "was silent regarding the reestablishment and reformation claims." In support of the summary judgment motion:

American Home, now purporting to act as U.S. Bank’s servicing agent, filed an affidavit, averring that the complaint’s allegations were true based on her knowledge as custodian of U.S. Bank’s business records, that U.S. Bank owned and held the Mortgage, and that Ms. Gee defaulted under the Mortgage by failing to make payments as due. Neither the motion nor the affidavit made mention of the lost note, the lost mortgage, or the claim for reformation of the deed and mortgage. To the contrary, the summary judgment motion stated that “the original promissory note, mortgage and assignment of mortgage would be filed on or before the hearing.” After a hearing, the court entered a summary final judgment of foreclosure, which reestablished the lost Mortgage, reformed the legal description contained in the mortgage and the warranty deed, and foreclosed the reestablished and reformed Mortgage.

The appellant appealed the summary judgment order and argued "among other things, that (1) U.S. Bank lacked standing to bring the foreclosure action, and (2) the summary judgment was entered on grounds that were not raised in the summary judgment motion." With regard to standing, the court stated:

Here, the record does not contain the original Mortgage. To prove its ownership, U.S. Bank filed a copy of the Mortgage as well as two assignments. The first assignment transferred the Mortgage from Advent Mortgage, the original mortgagee, to Option One. The second assignment purported to transfer the mortgage from American Home, as successor in interest of Option One, to U.S. Bank. However, and significant to our consideration, U.S. Bank provided nothing to demonstrate how American Home came to be the successor in interest to Option One. 

Incredibly, U.S. Bank argues that “[i]t would be inequitable for [Ms. Gee] to avoid foreclosure based on the absence of an endorsement to [it].” But that argument flies in the face of well-established precedent requiring the party seeking foreclosure to present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action. See Verizzo, 28 So. 3d at 978; Philogene v. ABN Amro Mortg. Group Inc., 948 So. 2d 45, 46 (Fla. 4th DCA 2006). When Ms. Gee denied that U.S. Bank had an interest in the Mortgage, ownership became an issue that U.S. Bank, as the plaintiff, was required to prove....As U.S. Bank failed to offer any proof of American Home’s authority to assign the Mortgage, we conclude that it failed to establish its standing to bring the foreclosure action as a matter of law. See Servedio v. U.S. Bank Nat’l Ass’n, 46 So. 3d 1105, 1107 (Fla. 4th DCA 2010) (.....); see also Khan v. Bank of Am., N.A., 58 So. 3d 927, 928 (Fla. 5th DCA 2011) (......); Verizzo, 28 So. 3d at 977 (.....). Cf. Isaac v. Deutsche Bank Nat’l Trust Co., 36 Fla. L. Weekly D727 (Fla. 4th DCA Apr. 6, 2011) (......); Taylor v. Deutsche Bank Nat’l Trust Co., 44 So. 3d 618 (Fla. 5th DCA 2010).

With regard to the second issue, the Court stated that "[a]s Ms. Gee contends, U.S. Bank’s summary judgment motion made no mention of its claim to reestablish the lost Mortgage and identified no evidence to support its claim that these documents were lost. Instead, the motion declared the opposite...."

"Because U.S. Bank’s motion did not address any facts or law pertaining to its entitlement to summary judgment on its claims to reestablish the lost instruments and reform the deed and mortgage, the trial court erred in entering summary judgment on these grounds. By failing to state with particularity the grounds upon which its summary judgment motion was based, U.S. Bank failed to provide Ms. Gee with proper notice of the separate issues to be resolved and why U.S. Bank was entitled to summary judgment...."

The oral argument in this case was held on July 28, 2011, and is below:

[I updated the post above on Tuesday, October 4, 2011, to add the oral argument video.]

SCOTUS Denies Stay of Florida Execution - Breyer Dissents

Approximately 2 hours and thirty minutes after the Miami Herald ran a story saying the State of Florida had executed Manuel Valle, a story picked up by news outlets around the country, the United States Supreme Court denied a stay of execution with a dissent by Justice Breyer. The News-Press, who ran the wire story, captures the timeline below along with the Herald's correction. Directly below that is the Supreme Court's Order [you will likely need to zoom in to view the Supreme Court's Order]:

Manuel Valle Corrections

Manuel Valle v. Florida, 564 U.S. _ (2011) Supreme Court Orders Denying Valle's Petitions

Additional Five Days Allowed To Respond When Order Or Filing Mailed To Party

In Optimum Nutrition, Inc. v. Performance Trading Imp. Exp. & Com. Ltd. (3D10-3807), the Third District reversed a trial court's dismissal for failure to prosecute because the trial court did not provide an additional five days to respond after a notice of lack of prosecution was sent by mail. 

"On July 29, 2010, the trial court issued a notice of lack of prosecution." Therefore, Optimum had to conduct record activity within the time frame provided by "Florida Rule of Civil Procedure 1.420(e)" which "provides that a party has sixty days to conduct record activity after service of the notice of lack of prosecution in order to avoid dismissal under the rule." Optimum filed a motion for summary judgment on the sixty-first day after the notice of lack of prosecution was mailed and the trial court dismissed the case.

The Third District reversed and stated:

The time period for an act to be computed after service of a notice, pleading, motion, order or paper served by mail includes five days which are added to the time. Fla. R. Civ. P. 1.090; see Palmer v. Palmer, 582 So. 2d 639, 640 n.1 (Fla. 3d DCA 1991). Because the notice of lack of prosecution was served by mail upon Optimum, an additional five days must be added to the safe-harbor period, meaning the period for conducting record activity did not actually expire until Monday, October 4, 2010. As Optimum filed and served its motion for summary judgment on September 28, 2010, it effectively “conducted record activity” within the meaning of Florida Rule of Civil Procedure 1.420(e), as the expiration of the time period for service did not expire until five days after September 28, 2010.

The emphasis above was added by me.

Information Learned As Counsel For Adversary In Case Precluded Adverse Representation In Different Case

In Frye v. Ironstone Bank (2D11-905), the Second District granted certiorari and held that the attorneys for the respondent were disqualified from representing the bank. The court's fourteen page opinion began:

Mr. Frye for an alleged breach of a loan guaranty. The question presented is whether the Bank's counsel should be disqualified from representing the Bank in the action on the guaranty where the Bank's counsel also represents Mr. Frye's former lawyer in a legal malpractice action. Mr. Frye's action for legal malpractice includes claims for matters directly related to his former lawyer's representation of Mr. Frye in the defense of the Bank's claims against him. Because the Bank's counsel has access to confidential communications between Mr. Frye and his former lawyer concerning the action on the guaranty by virtue of its representation of the former lawyer in the malpractice action, we conclude that the Bank's counsel is disqualified from representing the Bank in the action on the guaranty. Accordingly, we grant the petition for a writ of certiorari.

Ultimately, the court held that the circuit court departed from the essential requirements of the law by applying the test stated in Kaplan v. Divosta Homes, L.P., 20 So. 3d 459 (Fla. 2d DCA 2009). Instead of relying on Kaplan, the circuit court should have relied upon Adelman v. Adelman, 561 So. 2d 671 (Fla. 3d DCA 1990). The court summarized the problem with relying on Kaplan as follows:

Here, the circuit court applied the conflict of interest analysis in this court's decision in Kaplan to conclude that Mr. Frye had failed to meet the requirements for the disqualification of Henderson Franklin. The circuit court reasoned that because Mr. Frye was not a current or former client of Henderson Franklin, no irrefutable presumption arose that confidential information was disclosed between Mr. Frye and Henderson Franklin. The court also stated that Mr. Frye had failed to make an evidentiary showing that the Bank's action on the guaranty was the same or substantially the same as the legal malpractice matter in which Henderson Franklin is representing Mr. Frye's former counsel.

***

Unlike in Kaplan, Mr. Frye is not seeking to disqualify Henderson Franklin based upon a claimed conflict of interest. Thus Mr. Frye need not establish that he had an attorney-client relationship with Henderson Franklin and that the Bank's action on the guaranty and the legal malpractice claim are the same or are substantially related. Instead, Mr. Frye is seeking the disqualification of Henderson Franklin based on the unfair informational advantage it derives from its access to his confidential communications to Mr. Trupp through its representation of Mr. Trupp and the Arnstein firm in the legal malpractice action. Here, the conflict of interest analysis in Kaplan is not applicable.

Based upon the reliance on Kaplan, the court granted certiorari and stated:

By relying on the conflict of interest analysis in Kaplan, the circuit court applied the wrong legal rule to Mr. Frye's motion for disqualification. The circuit court's application of the wrong law in deciding Mr. Frye's motion to disqualify is a departure from the essential requirements of the law. Moreover, the Third District's analysis in Adelman is applicable here. The circuit court should have granted Mr. Frye's motion to disqualify Henderson Franklin under the reasoning in Adelman. Accordingly, we grant the petition for a writ of certiorari, quash the order under review, and remand this case for further proceedings.

The court also included a footnote stating:

In fairness to the circuit court, we note that neither Mr. Frye nor the Bank directed the circuit court's attention to the Adelman decision. However, Mr. Frye's argument for the disqualification of the Henderson Franklin firm was consistent with the reasoning in Adelman.

Substantial Amendment To Complaint Affords New Opportunity To Demand Arbitration

In Krinsk v. SunTrust Banks, Inc., the Eleventh Circuit released a published opinion and reversed the District Court's order and held that a defendant is given a new opportunity to demand arbitration when the plaintiff files an amended complaint. The court stated that:

[SunTrust] appeals the district court’s order denying its motion to compel plaintiff Sara Krinsk to submit her claims to arbitration pursuant to an arbitration agreement governed by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. The district court held that SunTrust had, by participating in the litigation for nine months prior to requesting that the case be submitted to arbitration, waived its contractual right to compel arbitration. In its appeal, SunTrust argues that Krinsk’s submission of an amended complaint revived its right to compel arbitration, notwithstanding its previous waiver of that right. We find merit in SunTrust’s argument and therefore vacate the order and remand to the district court for further proceedings.

The court stated:

Although, under the Federal Rules of Civil Procedure, “an amended complaint supersedes the initial complaint and becomes the operative pleading in the case,” Lowery v. Ala. Power Co., 483 F.3d 1184, 1219 (11th Cir. 2007), the filing of an amended complaint does not automatically revive all defenses or objections that the defendant may have waived in response to the initial complaint.....However, the defendant will be allowed to plead anew in response to an amended complaint, as if it were the initial complaint, when the “amended complaint . . . changes the theory or scope of the case.” Brown v. E.F. Hutton & Co., 610 F. Supp. 76, 78 (S.D. Fla. 1985) (citing Joseph Bancroft & Sons Co. v. M. Lowenstein & Sons Co., 50 F.R.D. 415 (D. Del. 1970)). It simply would be unfair to allow the plaintiff to change the scope of the case without granting the defendant an opportunity to respond anew. Id.

Likewise, a defendant’s waiver of the right to compel arbitration is not automatically nullified by the plaintiff’s filing of an amended complaint....Rather, courts will permit the defendant to rescind his earlier waiver, and revive his right to compel arbitration, only if it is shown that the amended complaint unexpectedly changes the scope or theory of the plaintiff’s claims.

In this case, the Eleventh Circuit held that the plaintiff changed the complaint to such an extent to allow the defendant to demand arbitration. The court stated:

Here, the Amended Complaint is clearly not like the amended complaints in these latter cases. Although, as the district court concluded, the Amended Complaint does merely assert new claims based on the same operative facts as the claims in the Original Complaint, the Amended Complaint is by no means “immaterial.” That conclusion flatly ignored the significance of the new class definition in the Amended Complaint, which greatly broadened the potential scope of this litigation by opening the door to thousands—if not tens of thousands—of new class plaintiffs not contemplated in the original class definition by discarding the old definition’s limits on the class plaintiffs’ age and on the bases for their HELOC suspensions, and by expanding the class period from over three months to over three years.

This vast augmentation of the putative class so altered the shape of litigation that, despite its prior invocations of the judicial process, SunTrust should have been allowed to rescind its waiver of its right to arbitration. 

Foreclosure Judgment Reversed Due To Challenge To Amount Owed

Update: In Glarum v. LaSalle Bank National Association (4D10-1372), the Fourth District withdrew the opinion discussed below and issued a new opinion on rehearing. The new opinion is discussed HERE.

---

In Glarum v. LaSalle Bank National Association (4D10-1372), the court reversed a foreclosure judgment.   The court explained the facts as follows:

Appellants admitted in their answer that they had not made payments according to the terms of the note, and as such, they were in default. Appellants, however, denied LaSalle’s allegations regarding the amount of the default. To establish the amount of appellants’ indebtedness for summary judgment, LaSalle filed the affidavit of Ralph Orsini, a “specialist” at the loan servicer, Home Loan Services, Inc. Orsini claimed in the affidavit that appellants  were in default of their payment obligations and owed in excess of $340,000 on the note. In opposition to the motion for summary judgment, appellants filed Orsini’s deposition, wherein Orsini explained  that he derived the $340,000 figure from his company’s computer system. However, Orsini did not know who entered the data into the computer, and he could not verify that the entries were correct at the time they were made. To calculate appellants’ payment history, Orsini relied in part on data retrieved from Litton Loan Servicing, a prior servicer of appellants’ loan.  

The court continued that "We find that Orsini’s affidavit  constituted inadmissible  hearsay  and, as  such, could not support LaSalle’s motion for summary judgment..."

Orsini did not know who, how, or when the data entries were made into Home Loan Services’s computer system. He could not state if the records were made in the regular course of business. He relied on date supplied by Litton Loan Servicing, with whose procedures he was even less familiar. Orsini could state that  the  data  in the affidavit was accurate only insofar as it replicated the numbers derived from the company’s computer system. Despite Orsini’s intimate knowledge of how his company’s computer system works, he had no knowledge of how that data was produced, and he was not competent to authenticate that data. Accordingly, Orsini’s statements could not be admitted under  section 90.803(6)(a),  and the affidavit of indebtedness constituted inadmissible hearsay.

On a separate issue in this appeal, the court stated:

The trial court also entered sanctions against appellants’ counsel for filing a “form  affidavit” from  an expert, Rita  Lord, who opined on the ability of lay persons to distinguish between original and high-quality copies  of promissory notes. Lord did not represent in the affidavit that she reviewed the  papers  at  issue in this case.  Nevertheless, the trial court was distressed by appellants’ counsel’s habit  of  filing  “the  same affidavit in ten different cases, when [Lord] hasn’t seen the documents in this case.” The court awarded LaSalle its reasonable attorney’s fees for having to file a motion to strike Lord’s affidavit.

***

The trial court did not make any specific findings of bad faith on the record, and the sanctions order must be reversed without prejudice....“Upon remand, should the  court  be  asked to  reconsider  the  issue,  any  future  hearing and order must comply with the requirements of Moakley.” [citation omitted].

The opinion was discussed in THIS Daily Business Review article titled "4th DCA bars affidavit over failure to verify" [subscription required].

Subrogation Is Not Available To An Amount Greater Than Paid By Insurer

In McCabe v. Florida Power and Light Company (4D10-1306), the "Plaintiff  received the policy limits  from his  homeowner’s insurer and FIGA for his  losses, as well as an additional $15,000 from FPL,  totaling $296,900. He never signed a full  release  in  favor of his insurance company, FIGA, or FPL for  the loss. In this action, Plaintiff sought over $600,000 in itemized damages, executed an affidavit, and gave a deposition with regard thereto."

The court stated that "the  insurer’s and FIGA’s satisfaction and releases do not bind Plaintiff even if FPL may be entitled to a collateral source set-off at some future point in the proceedings. An insurer and  successor in interest may subrogate to the rights of its insured but subrogation 'is not available to an extent greater than the amount paid by the insurer, and then only after the insured has been fully indemnified'.”

Ultimately, the court held that:

(1)  the circuit  court erred in granting final summary judgment, as  the amount of damages is a fact still in dispute; and (2) the insurer’s and FIGA’s (the Florida Insurance Guaranty Association) satisfaction and releases do not bind Plaintiff even if FPL may be entitled  to a collateral source set-off at some  future point in the proceedings.