Bank of America, N.A. v. Siefker

Plaintiff and Appellant Bank of America, N.A. (“BoA”) was the successor to, and assignee of, a secured mortgage originated by BAC Home Loans Servicing, LP (f/k/a Countrywide Home Loans Servicing, LP) for the benefit of Defendant and Appellee Barbara C. Siefker. BoA never informed Siefker that her mortgage had been assigned to it and initiated foreclosure proceedings against Siefker in the Circuit Court for the Seventeenth Judicial Circuit, Broward County. As an affirmative defense to the foreclosure action, Siefker alleged that Florida Statute § 559.715 required BoA to give no less than thirty days notice of the mortgage assignment before “any action to collect the debt.”

At the close of evidence at trial, Siefker moved for involuntary dismissal of the action based on BoA’s failure to produce evidence that it had complied with section 559.715. BoA countered that section 559.715 – and in effect, the Florida Consumer Collections Practices Act (“FCCPA”) – did not apply to mortgage foreclosure actions. The trial court initially denied Siefker’s motion and entered a final judgment of foreclosure, but upon Siefker’s motion for rehearing, the court reversed itself and essentially ruled that section 559.715 was a prerequisite for BoA’s lawsuit. The complaint was dismissed, leading to BoA’s appeal.

On appeal, the Fourth District Court of Appeals found there to be two threshold issues for its analysis. First, was a foreclosure action the equivalent of an action to collect on a consumer debt, so that the FCCPA actually applied to the proceeding? That question naturally required the comparison of a secured mortgage to a “consumer debt” to determine if there was any difference between the two. Second, if the first question was answered in the affirmative, was satisfaction of the thirty day notice requirement for the assignment of a consumer debt a prerequisite for any lawsuit seeking to collect that debt? The Court of Appeals answered the first question in the affirmative, but in the negative for the second question.

Section 559.55(1), Fla Stat., defines “debt” or “consumer debt” as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” To guide its analysis, Florida’s Fourth District sought help from the precedent of the federal court system. According to the U.S. Sixth Circuit Court of Appeals, a majority of federal district courts, when analyzing the federal version of the FCCPA (i.e., the Fair Debt Collection Practices Act, or the “FDCPA”), had found that a simple mortgage foreclosure was not the equivalent of debt collection, absent some concurrent attempt to collect a money judgment. See Siefker, 2016 WL 5939738 at 2 (citing Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 460 (6th Cir. 2013)). Instead the district courts characterized the foreclosures as actions to enforce a security interest. Id.

But in refuting the district courts, the U.S. Sixth Circuit Court of Appeals later held that just because a mortgage was akin to a security interest, it did not mean that a mortgage was not also a debt under the FDCPA. The relevant question was not “whether the obligation is secured, but rather upon the purpose for which it was incurred.” Id. Furthermore, debt collection pursuant to the FDCPA included activities such as initiating litigation to collect a debt. Id. at 3. The Sixth Circuit then jumped to Black’s Law Dictionary, which stated that “[t]o collect a debt or claim is to obtain payment or liquidation of it, either by personal solicitation or legal proceedings.” Id. Since foreclosure was the preamble to a bank’s liquidation of the foreclosed home to receive consideration for the bank’s loan, it was not a difficult step for Florida’s Fourth District Court of Appeals to determine that the FCCPA in fact applied to foreclosures, as the Sixth Circuit had determined that the FDCPA could apply in a federal case. In so holding, the Fourth District relied on precedent from the U.S. Eleventh Circuit Court of Appeals stating that the determination as to whether a foreclosure was an enforcement action or, alternatively, a debt collection, was to be based on the surrounding circumstances. Id. at 4 (internal citations omitted).

But then the Fourth District took a turn to the unexpected. Despite the clear language of section 559.715, which states that an action to collect a debt by an assignee cannot take place absent thirty days’ notice of the debt’s assignment, the Court of Appeals looked to a Second District Court of Appeals’ decision that had ruled just the opposite. Id. (citing Brindise v. U.S. Bank Nat’l Ass’n, 183 So.3d 1215, 1221 (Fla. 2d DCA 2016)). In ruling that section 559.715 was not a condition precedent to the filing of a lawsuit, the Second District focused on three main issues: (i) the Legislature knew how to draft conditions precedent for lawsuits in its legislation, but failed to put such express language into section 559.715; (ii) administrative penalties that apply to violations of the FCCPA were sufficient to ensure compliance with the rule; and (iii) the public policy behind the FCCPA was to prohibit egregious debt collection practices, and foreclosures did not fall into the “egregious” category. Id. at 4-5 (citing Brindise, supra, at 1219-20).

With Brindise as its platform, the Fourth District stated that the principles of statutory interpretation were “[t]he starting point for analysis” and that unlike statutes cited by Siefker, in which express prohibitions against filing an action without notice were inserted in the text, section 559.715 had no such condition precedent. Id. at 5. In other words, section 559.715 was clear and unambiguous not as to the words found in the statute, but rather by what words were not. Further, the Court opined that even if it were argued that section 559.715 was ambiguous, the legislative history and public policies supporting the FCCPA (“to eliminate abusive and harassing tactics in the collection of debts”) were not implicated by a mortgage foreclosure action, which had its own statutory framework that did not include the condition precedent of notice subsequent to the assignment of a mortgage. See Id. at 6 (citing Brindise, supra, at 1220; Ch. 702, Fla. Stat. (2012)). Finally, the Fourth District found it persuasive that the legislature had created a comprehensive administrative sanctioning framework for violations of the FCCPA, yet, failed to include a bar against filing a collections action as one of those sanctions. Id. at 6-7.

As can be seen, this matter was decided more on what the legislature did not state in section 559.715, rather than what was stated. Despite the Fourth District noting that this particular mortgage was a consumer debt, and that the foreclosure action on that debt was correctly characterized as a collection action, the Court of Appeals ruled that section 559.715’s prohibition on an action to collect the assigned debt was inapplicable. Nonetheless, we believe the Second and Fourth District’s analyses will be subject to more scrutiny in the coming future.