Filing # 73619934 E-Filed 06/15/2018 10:59:07 AM
IN THE SUPREME COURT OF THE STATE OF FLORIDA
KATHERINE E. RAUE,
Petitioner, vs. CASE NO.:
U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE, SUCCESSOR IN INTEREST TO BANK OF AMERICA, NATIONAL ASSOCIATION, AS TRUSTEE AS SUCCESSOR BY MERGER TO LASALLE BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR CERTIFICATEHOLDERS OF BEAR STERNS ASSET BACKED SECURITIES, LLC, ASSET-BACKED CERTIFICATES, SERIES 2005-HE9; SELECT PORTFOLIO SERVICING, INC.; and PEARSON BITMAN, LLP,
Respondents. ______/
PETITION FOR EXTRAORDINARY RELIEF
Petitioner KATHERINE E. RAUE, by and through her undersigned attorney,
pursuant to Rules 9.030(3) and 9.100, Florida Rules of Appellate Procedure, and Rule
RECEIVED, 06/15/201811:03:27 AM,Clerk,Supreme Court 1.540(b), Florida Rules of Civil Procedure, respectfully requests that the Court grant
her the extraordinary relief she seeks in this Petition. In support of this Petition,
Petitioner states:
-1- I. JURISDICTION
Petitioner seeks a remedy for the denial of her right to a jury trial in a court of law of her fraud claims against Respondent U.S. Bank by judges sitting in equity in the foreclosure division of the Orange County Circuit Court and by the Fifth District
Court of Appeal, in direct conflict with this Court’s decisions in Hauer v. Thum, 67
So.2d 643 (Fla. 1953) (“The equitable maxim, ‘He who comes into equity must come with clean hands,’ unlike the maxim, ‘Equity follows the law,’ has always enjoyed the dignity of a general principle. A Chancellor in every case should proceed with caution upon the creation of the issue of unclean hands on the part of one who solicits the assistance of a court of conscience”); Hightower v. Bigoney, 156 So. 2d 501 (Fla.
1963) (“. . . the filing of a compulsory counterclaim for relief cognizable at law in an action for equitable relief does not constitute the counter-claimant's waiver of the right to a jury trial of the issues raised by said compulsory counterclaim, provided, a jury trial is timely demanded”); and, Basulto v. Hialeah Auto, 141 So.3d 1145 (Fla. 2014)
(“Unconscionability is a common law doctrine that courts have used to prevent the enforcement of contractual provisions that are overreaches by one party to gain an unjust and undeserved advantage which it would be inequitable to permit him to enforce. Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which
-2- are unreasonably favorable to the other party.”)
Petitioner seeks relief from the denial of due process she has suffered and, if this Court does not act, will continue to suffer in violation of her rights guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution, Article
I, §§ 9, 21 and 22 of the Florida Constitution, and §§§ 90.803(6), 559.72(9) and
672.302, Florida Statutes. Petitioner has no other adequate remedy to vindicate her fundamental due process rights and save her home.
A final judgment of foreclosure against Petitioner and in favor of
Respondent U.S. BANK was entered in Orange County Circuit Court Case No.
2013-CA-000549-0 by Orange County Circuit Court Judge Heather L. Higbee on
June 6, 2017 [APPENDIX EXHIBIT A] after a non-jury trial on April 18, 2017.
[APPENDIX EXHIBIT T] Paragraph 11 of that judgment specifically provides:
“Final Judgment is entered in Plaintiff/Counter-Defendant’s favor against
Defendant- Counter Plaintiff, Katherine Raue, on the Counterclaims, specifically:
Fraud in the Inducement to Contract; Fraud and Coercion; Violations of the Florida
Consumer Collection Practices Act; and Civil Conspiracy.”
Petitioner timely appealed that judgment to the Fifth District Court of
Appeal, Case No. 5D17-1979. On appeal, Petitioner asserted that she had been denied due process of law by the trial court’s failure to grant her a jury trial of her
-3- legal fraud claims against the Respondent; and, that Respondent had failed to prove the value of its claim through the testimony of a robo-witness supplied by its latest servicer at trial. The Fifth DCA affirmed the foreclosure judgment without opinion on May 8, 2018.
Petitioner timely requested that the Fifth DCA write an opinion that would permit this Court’s review and certify two questions to this Court. [APPENDIX
EXHIBIT B; Respondent’s Response to Petitioner’s Request is included as
APPENDIX EXHIBIT C] Petitioner’s request was denied on June 6, 2018.
Petitioner also moved that court to stay issuance of its mandate pending this Court’s review. [APPENDIX EXHIBIT D] That motion was denied on June 8, 2018. As of the date of Petitioner’s filing this Petition in this Court, the Fifth DCA has not yet issued its mandate to the trial court.
This Court has jurisdiction of this petition and authority to grant Petitioner the relief she requests pursuant to Article 5, §§ 3(b)(3) and (7) of the Florida
Constitution and Rules 9.030(3) and 9.100, Florida Rules of Appellate Procedure.
Rule 1.540(b), Florida Rules of Civil Procedure, also specifically recognizes
Petitioner’s right to bring this original, independent action to obtain relief from the trial court's final judgment of foreclosure “. . . for fraud upon the court.”
In Basulto, the Court said, “[w]e have granted discretionary review under our
-4- jurisdiction to consider express and direct conflict of decisions, see art V, § 3(b)(3),
Fla. Const., because the Third District's decision in Basulto has created misapplication conflict with our decision in Seifert. See generally Acensio v. State,
497 So. 2d 640, 641 (Fla. 1986) ("Based on the conflict created by [the] misapplication of law, we have jurisdiction under article V, section 3(b)(3), Florida
Constitution."); State v. Stacey, 482 So. 2d 1350, 1351 (Fla. 1985) (exercising jurisdiction because the district court "misapplied controlling case law to the facts of the case"). In this case, the lower courts ignored undisputed facts and controlling law and, thus, "misapplied controlling case law to the facts of the case” in direct conflict with this Court’s decisions.
II. FACTS ON WHICH PETITIONER RELIES
1. In 2005, Petitioner borrowed $175,000 from Ames Bank and entered into a fixed rate, fixed term mortgage and note.
2. The mortgage included a provision that states:
25. Jury Trial Waiver. The Borrower hereby waives any right to a trial by jury in any action, proceeding, claim or counterclaim, whether in contract or tort, at law or in equity, arising out of or in any way related to this Security Instrument or the Note.
3. After Petitioner’s mortgage was set adrift in the sea of securitized
-5- mortgages swirling around in Florida, EMC MORTGAGE CORPORATION
[hereinafter referred to as ‘EMC”] took over the servicing of Petitioner’s mortgage and note.
4. EMC caused two wrongful foreclosure cases to be filed against Petitioner on behalf of the trust now managed by Respondent U.S. Bank, in 2006 and 2008
[APPENDIX EXHIBITS E and F], even though ownership of Petitioner’s mortgage was not transferred to the trust until May, 2010. [APPENDIX EXHIBIT
G]
5. In November, 2008, after timely making her monthly payment of
$1,825.23 on November 7, 2008, Petitioner contacted EMC and inquired about the HAMP and HARP loan modification programs that had just been created by the
U.S. government in the wake of the 2008 U.S. banking crisis.
6. Petitioner was specifically told by EMC employees that she would have to be two months behind in her payments in order to be eligible for a either a
HARP or a HAMP loan modification. Relying on that specific misrepresentation and express instructions by EMC’S employees, Petitioner did not make a payment to EMC in December, 2008.
7. In a Billing Statement dated “12/29/08,” EMC reported that the principal balance of Petitioner’s mortgage was then $168,846.57. Although an earlier
-6- EMC statement had reflected EMC’s receipt of the payment, the subsequent
12/29/08 Billing Statement failed to reflect Petitioner’s payment of $1,825.23 to
EMC on November 7, 2008, but did show that EMC was diverting Petitioner’s payments into a “suspense account.”
8. On January 5, 2009, despite Petitioner having timely made her monthly payment of $1,825.23 on November 7, 2008, EMC sent Petitioner a notice of default that stated “[a]s of 01/03/2009 the amount of the debt that we are seeking to collect is $7,187.24, which includes the sum of payments that have come due on and after the date of default 11/01/2008, any late charges, periodic adjustments to the payment amount (if applicable) and expenses of collection.”
9. As of January 5, 2009, Petitioner had only failed to make one payment, due for December, 2009, as instructed by EMC employees. Petitioner’s payment for January, 2010 was not even due until January 10, 2010.
10. On January 5, 2009, EMC also sent Petitioner a notice that her “home may be eligible for a loan modification program ...”
11. Throughout January and February, 2009, Petitioner had repeated telephone contact with EMC employees trying to find out why her November, 2008 payment had not been credited to her account and to work out a loan modification plan that would reduce her monthly payments under either the HAMP or the HARP
-7- programs.
12. Petitioner did not make payments to EMC in January and February,
2009, relying on specific instructions she was given by EMC employees.
13. On February 11, 2009, EMC sent Petitioner a letter notifying her that her account had been forward to its attorneys, SHAPIRO & FISHMAN, to initiate foreclosure proceedings.
14. On February 20, 2009, EMC sent Petitioner a letter acknowledging that she had made application for a loan modification and instructing her to provide additional information. Petitioner faxed all of the required documents to EMC for the first time, pursuant to its employees’ instructions, within two days of receiving
EMC’s letter.
15. On February 20, 2009, EMC faxed Petitioner a “Repayment Plan.”
That Repayment Plan failed to reflect Petitioner’s November 7, 2008 payment, instead listing five (5) “P & I Payments” of $1,212.21 as being “past due and owing” and total arrearage of $12,770.15. As of February 20, 2009, Petitioner had only failed to make monthly payments, as instructed by EMC employees, in
December, 2008, January, 2009 and February, 2009. In addition to the “P&I” amounts claimed to be “past due and owing,” the total arrearage included
“Corporate recoverable advances (Attorney Fees/Costs, appraisals, inspections, etc.
-8- paid by EMC)” of $2,729.35; “Escrow (Advances and Required)” of $1,174.40; and, “Estimated outstanding attorney fees/cost” of $2,514.00.
16. That Repayment Plan required Petitioner to immediately pay the sum of
$1,416.00 by Western Union Quick Pay on or before February 28, 2009 and to make monthly mortgage payments of $1,225.00 on the 15th of every month thereafter.
17. In repeated telephone contacts with EMC employees between February
20, 2009 and February 27, 2009, Petitioner disputed and questioned the amounts claimed to be “past due and owing” in the Repayment Plan, to no avail. EMC refused to account for the payment Petitioner made on November 7, 2008 or to explain how a payment that was not yet due could be “past due and owing.”
18. On or about February 26, 2009, Petitioner was advised by an EMC employee that the offered Repayment Plan would be withdrawn and foreclosure proceedings would be commenced against her immediately if she did not accept the terms of the Repayment Plan and wire the $1,416.00 payment to EMC before
February 28, 2009.
19. On February 27, 2009, Petitioner reluctantly signed and faxed the
Repayment Plan back to EMC and wired the $1,416.00 payment from her bank account to EMC in order avoid another foreclosure suit and the risk of losing her
-9- home.
20. From February, 2009 and continuing to June, 2010, EMC repeatedly sent
Petitioner notices that “YOUR MODIFICATION IS AT RISK,” stating that
Petitioner had not provided requested information. Each time Petitioner received such a notice, she called EMC in an effort to comply with the program requirements despite having already provided all the information requested from her multiple times. After each conversation, Petitioner immediately faxed the requested information to the person with whom she had just spoken.
21. On June 8, 2010, EMC sent Petitioner a letter “to confirm receipt of your recently submitted request for modification under the Making Home Affordable
(“MHA”) program.” Petitioner had not made any such request “recently.”
22. On June 23, 2010, EMC sent Petitioner a letter “to notify you that the
Trial Period Plan Offer through the Making Home Affordable (“MHA”) modification program for the above-referenced account has expired” because
Petitioner supposedly “did not provide us with the documents we requested.”
23. On July 20, 2010, EMC sent Petitioner a second letter “to notify you that the Trial Period Plan Offer through the Making Home Affordable (“MHA”) modification program for the above-referenced account has expired” because
Petitioner supposedly “did not provide us with the documents we requested.”
-10- 24. Having denied Petitioner a modification under both of the government- sponsored programs on the false premise that she “did not provide us with the documents we requested,” on August 5, 2010, EMC sent Petitioner a letter offering her its own Loan Modification Agreement. That letter showed her
“Current Unpaid Principal Balance” was then $167,631.84. Under the heading
“Terms of the Agreement,” the letter says:
The total amount due to modify your Loan is $.00. This amount is itemized below. This amount includes late charges, foreclosure fees, property inspection fees, plus any other miscellaneous fees previously discussed. EMC Mortgage Corporation reserves the right to adjust this and refuse any funds which are insufficient for any reason, including but not limited to additional disbursements made by EMC between the date of this statement and our receipt of the funds.
Initial Payment Contribution $6,950.70 Less Funds Held in Suspense ($8,035.70) Less Credits ($.00) Total due $.00
There was no explanation of what “Initial Payment Contribution” meant or why any funds Petitioner had paid to EMC were “Held in Suspense” instead of being properly credited to her account when they were received. There was no explanation of how the $1,085.00 difference between those two items could result in a “Total due” of “$.00,” or if the $1,085.00 ever credited to Petitioner’s account. Without explanation for how $12,985.89 in interest was calculated, that
-11- amount was arbitrarily added to the balance of Petitioner’s loan, resulting in an
“Adjusted Unpaid Principal Balance” of $180,617.73 that was to be repaid in new monthly payments of $1,205.00, including escrow funds for taxes and insurance.
The loan modification extended the mortgage until 2035 and, then, would require
Petitioner to make a balloon payment of $118,793.51 before she could satisfy the mortgage and note as modified. In other words, even if Petitioner faithfully paid her mortgage payments for another 30 years, Petitioner would still owe more than
68% of the $175,000 she had actually borrowed at the end of the 30-year term of the mortgage and note as modified. [APPENDIX EXHIBIT H]
25. The modification agreement did not contain an express jury trial waiver but incorporated the terms of Petitioner’s mortgage and note by reference.
26. When Petitioner inquired and complained about the terms of the modification agreement, Petitioner was unable to get any answers to her questions about the confusing information provided in the letter from EMC. Instead, EMC employees threatened to file a foreclosure suit against her if Petitioner did not agree to the terms of the modification agreement. Petitioner was not in default when that threat was made, having timely made all of her payments due since February, 2009.
27. EMC required Petitioner to accept the proposed modification agreement before August 11, 2010, which she only did reluctantly, after being threatened
-12- again, to avoid another foreclosure suit and the risk of losing her home.
28. Beginning in December, 2010 and continuing through June, 2011, EMC repeatedly sent notices to Petitioner that payments she had timely made to EMC were not received. Every time she received such a notice, Petitioner contacted
EMC by telephone in an attempt to locate her missing payments.
29. Beginning in December, 2010 and continuing through June, 2011, EMC assessed late fees on Petitioner’s account each month despite Petitioner’s timely payments that were being automatically drafted from her bank account and paid to
EMC days prior to their due date each month.
30. On March 15, 2011, EMC sent Petitioner notice that the servicing of her mortgage would be transferred from EMC to CHASE as of April 1, 2011.
31. From March 15, 2011 through July, 2011, Petitioner contacted both
EMC and CHASE in attempt to discover where her missing payments were going and why late fees were being assessed on her account. When Petitioner contacted
EMC, EMC employees told Petitioner that her mortgage was being serviced by
CHASE and directed her to contact CHASE. When Petitioner contacted CHASE, employees of CHASE told Petitioner that they did not yet have her “file” and directed her to contact EMC.
32. Petitioner never received any monthly account statements from CHASE
-13- but, continued to receive monthly statements from EMC through June, 2011, showing that her timely payments were not being properly credited to her account and late fees were being assessed.
33. By June, 2011, Petitioner was still trying to get a proper accounting of her timely payments and reversal of the late payment assessments from EMC to no avail. EMC and CHASE continued their game of each referring Petitioner to the other for information about her account. Uncertain where she was supposed to send her payments, Petitioner finally stopped the automatic drafts from her bank account and did not make a payment in July, 2011.
34. On July 29, 2011, EMC sent a default letter falsely stating that Petitioner was “... in default because you have failed to pay the required monthly installments commencing with the payment due 06/01/2011.” Although the letter listed telephone numbers Petitioner could contact, once again her attempts to contact
EMC were referred to CHASE and her attempts to contact CHASE were referred to EMC.
35. Petitioner finally gave up trying to get information from EMC and
CHASE in August, 2011, believing that a foreclosure suit would be brought against her that would enable her to finally get an accounting for the all of the money she had paid to EMC.
-14- 36. More than 18 months after Petitioner stopped making payments to EMC in July, 2011, Respondent’s foreclosure complaint was filed by EMC on behalf of the Respondent on January 11, 2013.
37. Appellant timely moved to dismiss the complaint on February 11, 2013.
38. Respondent took no action in the case for almost a year after filing it, until Respondent hired a new servicing agent, SELECT PORTFOLIO
SERVICING, INC. [hereinafter referred to as ‘SPS”] and new attorneys.
39. The trial court entered an order denying Petitioner’s Motion to Dismiss on February 20, 2014. Petitioner filed her original Answer and Affirmative
Defenses on March 10, 2014.
40. The Respondent’s latest servicing agent, SPS, and attorneys have had knowledge of all of the undisputed facts stated by Petitioner under oath as support for her affirmative defenses and counterclaims since August 20, 2014, when
Petitioner was deposed.
41. On September 5, 2014, Appellant filed a MOTION FOR LEAVE TO
FILE AMENDED ANSWER, AFFIRMATIVE DEFENSES AND
COUNTERCLAIMS AND DEMAND FOR JURY TRIAL [APPENDIX
EXHIBIT I], in which Petitioner pleaded her fraud claims against Respondent with the requisite specificity and detail, setting forth the facts in support of her
-15- affirmative defenses and counterclaims under oath. [The facts stated in paragraphs
1 through 35 above were stated under oath in Petitioner’s pleading.] Petitioner’s motion was granted by the trial court on September 29, 2014.
42. In September, 2014, SPS notified Petitioner that, as a result of a class action settlement in a Massachusetts case, Petitioner might be entitled to an adjustment of the balance of her mortgage. [APPENDIX EXHIBIT J] Petitioner was not a member of the class that sued EMC and CHASE in Massachusetts because she did not own property in that state. But, EMC’s accounting tactics of failing to properly account for payments received, holding funds in suspense accounts, and wrongfully assessing late fees on the customers’ accounts at issue in that case, were essentially the same kinds of tactics EMC had employed against
Petitioner from at least December, 2010 through June, 2011.
43. Shortly after Petitioner’s Amended Answer, Affirmative Defenses and
Counterclaims was accepted by the trial court, Respondent changed attorneys yet again and Respondent’s current counsel, PEARSON BITMAN, LLP, took over the prosecution of Respondent’s foreclosure case.
44. By November, 2014, both SPS and PEARSON BITMAN had actual knowledge that EMC and CHASE’s computerized payment records did not accurately reflect the money EMC had extorted from Petitioner with repeated
-16- threats of immediate foreclosure; the Petitioner’s timely payments; the late fees
EMC arbitrarily assessed to Petitioner’s account; or, EMC’s unscrupulous accounting tactics. Both SPS and PEARSON BITMAN knew that the calculation of Respondent’s claims against Petitioner based on the 2013 foreclosure complaint filed by EMC were not based on an accurate accounting what Petitioner paid.
EMC had falsely and deliberately inflated the Petitioner’s debt and unfairly modified the terms and conditions of Petitioner’s original obligation.
45. On August 27, 2015, Respondent filed a motion to strike Petitioner’s demand for a jury trial, citing only the jury trial waiver provision in Petitioner’s original mortgage as justification. [APPENDIX EXHIBIT K]
46. Before Respondent’s counsel could be heard on a motion to compel
Petitioner to produce documents filed in September, 2015, Petitioner had already delivered all the documents in her possession to Respondent that corroborated her sworn statements of fact and proved the truth of her affirmative defenses and counterclaims. Petitioner had also answered Respondent’s interrogatories.
Consequently, Respondent’s motion to compel was denied.
47. On December 15, 2015, Petitioner filed an OBJECTION TO
SCHEDULED ONE-HOUR BENCH TRIAL that was docketed for December 23,
2015. [APPENDIX EXHIBIT L] In that OBJECTION, Petitioner asserted, inter
-17- alia:
10. A foreclosure action is an equitable proceeding which may be denied if the holder of the note comes to the court with unclean hands or the foreclosure will be unconscionable. Knight Energy Services, Inc. v. Amoco Oil Company, 660 So.2d 786 (Fla. 4th DCA 1995); Bank of America v. Pate, 159 So.3d 383 (Fla. 1st DCA 2015). Thus, this Court must first resolve the issue of whether Plaintiff, acting through its servicing agents and attorneys, has come into the Court with "unclean hands" seeking to enforce an unconscionable contract of adhesion before it can enforce the terms of the documents in Plaintiff's possession. Hauer v. Thum, 67 So.2d 643 (Fla. 1953).
* * * *
12. Plaintiff's mere possession of Ms. Raue's note, mortgage and loan modification agreement does not automatically entitle Plaintiff to a final judgment of foreclosure. Plaintiff must actually prove that it is entitled to enforce the terms of the documents it possesses with competent evidence. See, e.g., Colon v. JP Morgan Chase Bank, N.A., 162 So.3d 195 (Fla. 5th DCA 2015); Patel v. Aurora Loan Services, 162 So.3d 23 (Fla. 4th DCA 2014); Ramos v. Citimortgage, Inc., 146 So.3rd 126 (Fla. 3rd DCA 2014); Kushner v. Wyndsong Estates Homeowners Association, Inc., 137 So.3d 527 (Fla. 4th DCA 2014); Kelsey v. SunTrust Mortgage, Inc., 131 So.3d 825 (Fla. 3rd DCA 2014); DiSalvo v. Suntrust Mortgage, 115 So.3d 438 (Fla. 2nd DCA 2013); Glarum v. Lasalle Bank National Association, 83 So.3d 780 (Fla. 4" DCA 2011); Bryson v. Branch Banking and Trust Company, 75 So.3d 783 (Fla. 2nd DCA 2011); Lazuran v. Citimortgage, Inc., 35 So.3d 189 (Fla. 4th DCA 2010).
13. Plaintiff’s counsel has failed and refused to disclose to Ms. Raue what witness or witnesses will testify for Plaintiff at trial despite repeated requests that Plaintiff’s witness(es) be identified and made available for deposition prior to trial.
14. The documents Plaintiff has produced to Ms. Raue through
-18- discovery do not provide any competent evidence to demonstrate the accuracy of the amount Plaintiff now claims is due from Ms. Raue and such inadequacy cannot be cured by the testimony of some random, and still as yet, undisclosed representative of Plaintiff’s latest servicer relying on computer-generated records obtained from Plaintiff’s prior servicers. See, Channell v. Deutsche Bank National Trust Co., 173 So.3d 1017 (Fla. 2nd DCA 2015); Holt v. Cakchas, LLC, 155 So.3d 499 (Fla. 4th DCA 2015); Hunter v. Aurora Loan Services, LLC, 137 So.3d 570 (Fla. 1st DCA 2014) citing Glarum v. Lasalle Bank National Association, supra; Yang v. Sebastian Lakes Condominium Association, Inc., 123 So.3d 617 (Fla. 4th DCA 2013); Sas v. Federal National Mortgage Association, 112 So.3d 778 (Fla. 2nd DCA 2013); Green v. JP Morgan Chase Bank, N.A., 109 So.3d 1285 (Fla. 5th DCA 2013); Maine v. M & I Bank, 67 So.3d 1129 (Fla. 1st DCA 2011).
15. In the absence of any competent evidence to refute the truth of the facts Ms. Raue has set forth under oath as her affirmative defenses, Plaintiff is not entitled to enforce the terms of the note, mortgage and loan modification agreement it possesses in this Court sitting in equity. See, Bank of America, N.A. v. Pate, supra; Shahar v. Green Tree Servicing, LLC, supra; Kelsey v. SunTrust Mortgage, Inc.,supra. See also, Sanchez v. Cell Builders, Inc., 98 So.3d 251 (Fla. 5th DCA 2012); Knight v. Amoco Oil Company, supra; Peale v. Gleans, 349 So.2d 732 (Fla. 3rd DCA 1977).
16. In August and September, 2014, Chad Muney, one of Plaintiff's many attorneys in this case, affirmatively represented to both Ms. Raue and her undersigned counsel that Plaintiff does not possess and cannot produce any other records of EMC and/or CHASE'S servicing of Ms. Raue's mortgage than what appear to be screenshots of purported computerized payment histories generated by EMC and CHASE.
17. In the absence of any competent evidence to refute the truth of the facts Ms. Raue has set forth under oath as her affirmative defenses, Ms. Raue cannot be denied her constitutional right to a jury
-19- trial on her counterclaims against Plaintiff before Plaintiff is entitled to proceed on its foreclosure complaint.
48. Petitioner’s OBJECTION and Motion for Continuance, necessitated by her counsel’s need to withdraw, was heard on December 23, 2015. [APPENDIX
EXHIBIT S]
49. In response to Petitioner’s OBJECTION, Respondent argued its reliance on the language of the jury trial waiver set forth in Petitioner’s mortgage and presented no evidence to challenge or disprove the facts Petitioner stated under oath in support of her affirmative defenses and counterclaims in her pleading.
50. The trial court denied Petitioner’s OBJECTION but, granted her motion for a continuance, setting the case for a non-jury trial on April 18, 2016. In a written order entered on January 4, 2016, the trial court reiterated its order that
“[t]he pleadings are closed.”
51. On March 24, 2016, despite the trial court’s order that “[t]he pleadings are closed,” Respondent further delayed the trial of the case by filing a motion for leave to amend its complaint, alleging that the mortgage, note and modification agreement had been lost by the clerk’s office and, thus, Respondent needed to amend its complaint to add a count to reestablish the lost documents.
52. Over Petitioner’s objection, the trial court granted Respondent’s motion
-20- and its amended complaint was deemed to be filed on March 29, 2016.
53. Petitioner timely filed an answer to Respondent’s amended complaint, reasserted her affirmative defenses and counterclaims and, again, demanded a jury trial. [APPENDIX EXHIBIT M]
54. On May 12, 2016, Respondent filed a motion to strike Petitioner’s demand for a jury trial, again asserting that Petitioner was bound by the jury trial waiver in her original mortgage. [APPENDIX EXHIBIT N]
55. Petitioner filed an objection to Respondent’s motion to strike her demand for a jury trial on June 28, 2016 [APPENDIX EXHIBIT O], in which Petitioner asserted, inter alia:
7. Ms. Raue is entitled to a jury trial of her legal fraud-based counterclaims before Plaintiff can proceed on its foreclosure complaint. See, Spring v. Ronel Refinishing, Inc., 421 So.2d 46, 47 (Fla. 3rd DCA 1982), disapproved of on other grounds, 720 So.2d 214 (Fla. 1998), in which the court said:
Foreclosure is a traditional equitable remedy as is the counterclaim for cancellation. It is equally unassailable that the counterclaim for fraud and misrepresentation presents a legal claim for which the petitioners were entitled to a jury trial. The mixture of equitable and legal claims in the same case cannot deprive a party of its right to a jury trial of issues traditionally triable to a jury. Padgett v. First Federal Savings & Loan Association of Santa Rosa County, 378 So.2d 58 (Fla. 1st DCA 1979) and cases cited therein. The more difficult question, however, is the order in which these issues must be tried.
-21- In Adams v. Citizens Bank of Brevard, 248 So.2d 682 (Fla. 4th DCA 1971), the court held:
. . . if a compulsory legal counterclaim entitles the counter-claimant to a jury trial on issues which are not common to any issue made by the equitable complaint, the trial court should proceed to try the equitable issue nonjury with appropriate provision made for a jury trial as to the law issues if disposition of the equitable issues does not conclude the case. Southwestern Life Insurance Co. v. Gerson, [187 So.2d 63 (Fla. 3d DCA 1966)]. But where the compulsory counterclaim entitles the counter-claimant (upon timely demand) to a jury trial on issues which are sufficiently similar or related to the issues made by the equitable claim that a determination by the first fact finder would necessarily bind the later one, such issues may not be tried nonjury by the court since to do so would deprive the counter-claimant of his constitutional right to trial by jury. (Emphasis added.)
See also, Yer Girl Tera Mia v. Wimberly, 962 So.2d 993 (Fla. 5th DCA 2007).
8. Ms. Raue’s claim that she was fraudulently induced to enter into a modification agreement of the original mortgage and note cannot be defeated by a contractual agreement that does not specifically state that a fraud claim is not sufficient to negate the contract. Fraud in the procurement of a contract is ground for recision and cancellation of a contract. A claim of fraud in the inducement will not be defeated by contract clauses. Lower Fees, Inc. v. Bankrate, Inc., 74 So.3d 517 (Fla. 4th DCA 2011).
56. On November 1, 2016, Petitioner filed an AMENDED MOTION FOR
PARTIAL SUMMARY JUDGMENT, together with a supporting affidavit,
-22- asserting, inter alia, that Respondent “... has come into this Court of equity with unclean hands to enforce an unconscionable contract of adhesion, knowing that
[Respondent] cannot prove the accuracy of the debt [Respondent] claims Ms.
Raue owes.” [APPENDIX EXHIBITS P and Q]
57. In response to Petitioner’s motion [APPENDIX EXHIBIT R], the
Respondent argued, inter alia, that “[t]he [Petitioner’s] claim of unclean hands is nothing more than garden variety attempt to avoid foreclosure.” Respondent flooded the court file with documents and affidavits but, none of those documents disputed or disproved any of the facts Petitioner had repeatedly stated under oath that Respondent already knew to be true.
58. Although Respondent did not offer any evidence to refute or disprove the facts set forth in Petitioner’s affidavit in support of her motion, the trial court denied Petitioner’s motion, finding that there were disputed issues of fact precluding summary judgment.
59. Petitioner only participated, over her renewed objection, in the pro forma bench trial of this case on April 18, 2017, because she had no choice.
[APPENDIX EXHIBIT T]
60. Miraculously, after delaying the trial for a year, just before the trial started on April 18, 2017, Respondent’s counsel announced that the missing
-23- mortgage, note and modification agreement had been located so, it would be unnecessary for Respondent to reestablish those documents at trial.
61. At trial, Respondent presented only one witness, Linda Holmes, an SPS employee. Respondent used the testimony of its “robo-witness” to enter documents into evidence that were obviously created for trial with the deliberate intent to whitewash EMC and CHASE’S fraud and coercion.
62. The trial court made it clear that Ms. Holmes’ testimony was sufficient to satisfy the court that Respondent was entitled to a judgment of foreclosure, without any consideration or examination of Ms. Holmes’ utter lack of personal knowledge about the documents she described and/or Petitioner’s dealings with
EMC and CHASE.
63. Ms. Holmes did little more than describe the documents that were admitted through her testimony. Ms. Holmes testified that she had no personal knowledge of any of the facts of this case, having only been provided the documents she described three weeks before trial.
64. Ms. Holmes did not testify how the EMC and CHASE documents contained in the package of materials she was given were created, maintained or even transferred to SPS. Ms. Holmes testified that she had never worked in SPS’s
“boarding department.”
-24- 65. Ms. Holmes did not offer any testimony to demonstrate the accuracy and trustworthiness of the EMC and CHASE computerized payment histories, or the default letter sent to Petitioner by EMC, that were included in the documents she was provided. Ms. Holmes testified that somebody else at SPS had “audited” the
EMC and CHASE records.
66. The trial court summarily denied Petitioner’s hearsay objection to Ms.
Holmes’ testimony without hearing any argument, before Petitioner’s counsel could even cross-examine her.
67. The trial court made a show of giving Petitioner time to present her case but, unduly limited Petitioner’s testimony and arbitrarily thwarted Petitioner’s attempts to introduce documentary evidence to corroborate and demonstrate the facts she stated under oath in her pleadings and on the witness stand. The trial court made it clear that she wasn’t really interested in examining all the facts relevant to the Petitioner’s affirmative defense and counterclaims. The trial court ignored the evidence and testimony Petitioner was able to get into the record at trial.
68. The trial court sua sponte volunteered an excuse for Respondent’s still on-going violation of the Florida Consumer Collections Practices Act’s prohibition of a debt collector’s continuing direct contact with a debtor known to be represented by counsel. See, §559.72(18), Florida Statutes.
-25- 69. The trial court announced her decision before Petitioner had even left the witness stand, citing case law that has no relevance to the issues in this case as justification for her ruling and speculating as to the reasons EMC handled
Petitioner’s account as it did.
70. At the conclusion of the trial, the court was only interested in obtaining
Ms. Holmes’ assurance that the numbers she submitted were the correct numbers to be inserted into the foreclosure judgment. The trial court was unconcerned that those numbers were manufactured by Respondent’s latest servicer and attorneys for purposes of trial, despite having actual knowledge and documentary proof since
2014 of the fraud perpetrated on Petitioner by EMC and CHASE.
71. On appeal, Petitioner unsuccessfully challenged the denial of her right to a jury trial, as well as the admissibility and sufficiency of the testimony of
Respondent’s robo-witness to establish the value of Respondent’s claim, to no avail.
III. NATURE OF RELIEF REQUESTED
Petitioner respectfully requests that the Court:
1. Immediately issue an order to the Fifth District Court of Appeals staying issuance its mandate to the Orange County Circuit Court in Appeal No. 5D17-1979 pending disposition of this Petition;
-26- 2. Issue an order to the Orange County Circuit Court to vacate the Final
Judgment of Foreclosure, entered on June 6, 2017 in Case No. 2013-CA-000549-0 and enter an order dismissing U.S. Bank’s complaint with prejudice; and,
3. Issue an order to the Orange County Circuit Court directing that court to grant Petitioner a jury trial on her counterclaims against U.S. Bank in Case No.
2013-CA-000549-0.
IV. ARGUMENT
The Florida Consumer Collection Practices Act, §559.72, Florida Statutes, provides that:
In collecting consumer debts, no person shall:
(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist.
That statute seems to embody the legislature’s intent to codify the unclean hands defense to foreclosure that has long been recognized by the courts of this state. See, e.g., Hauer v. Thum, 67 So.2d 643 (Fla. 1953). Florida courts have also recognized that the FCCPA applies not only to debt collectors but also to any
"person," including foreclosing banks that act through their agents and attorneys.
-27- See, e.g., Gann v. BAC Home Loans Servicing LP, 145 So. 3d 906 (Fla. 2nd DCA
2014); Schauer v. Gen. Motors Acceptance Corp., 819 So. 2d 809, 812 (Fla. 4th
DCA 2002).
In Cong. Park Office II, LLC v. First-Citizens Bank & Trust Co., 105 So. 3d
602, 609 (Fla. 4th DCA 2013), the court reiterated unequivocally that:
Unclean hands is an equitable defense that is akin to fraud; its purpose is to discourage unlawful activity. It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief. The appellate court has equated sneaky and deceitful with unclean hands. Equity will stay its hand where a party is guilty of conduct condemned by honest and reasonable men. [Emphasis added.]
Respondent delayed filing and dragged out its prosecution of its foreclosure case against Petitioner with the obvious intent of masking EMC’s fraudulent and coercive conduct and avoiding the courts’ scrutiny of the facts and corroborating documentary evidence Petitioner provided to Respondent’s attorneys as proof of her affirmative defenses and counterclaims. Since 2014, Respondent, SPS and
PEARSON BITMAN LLP have had actual knowledge and documentary proof that
EMC employed unscrupulous accounting methods that did not accurately reflect
Petitioner’s payments; EMC arbitrarily and without justification assessed
-28- unwarranted fees and late charges on Petitioner’s account; and, EMC had repeatedly threatened Petitioner with foreclosure to coerce her compliance with its unreasonable demands.
Respondent presented no evidence prior to trial, at trial, or on appeal, to dispute or disprove the facts Petitioner swore to under oath in support of her affirmative defenses and counterclaims in her pleadings, in an affidavit in support of her motion for partial summary judgment and, even in her testimony at trial.
Instead, having secured a pro forma bench trial before one of the judges in the foreclosure division of the Orange County Circuit Court, Respondent offered only the testimony of a robo-witness who had no personal knowledge of any of the facts about which she testified. But, according to Respondent, it doesn’t matter that
Petitioner was denied a jury trial on her fraud claims. Petitioner got all the due process she was entitled to because she signed a waiver of a jury trial and she got a bench trial in the foreclosure court. Petitioner just failed to prove her case at trial, where the judge was the finder of fact. [APPENDIX EXHIBIT C]
Contrary to Respondent’s assertion, the right of a trial by jury in a court of law exists and is guaranteed by Article I, §22 of the Florida Constitution as to those issues which were triable before a jury at common law, regardless of the form of suit or proceeding. Hightower v. Bigoney, 156 So. 2d 501 (Fla. 1963). In
-29- Hightower, the Court reversed a judgment affirming the denial of the appellant real property owners' jury trial request in a lien foreclosure case.
The Hightower court held that in the suit at common law, the right of trial by jury should have been preserved, and the filing of a compulsory counterclaim for relief at law did not constitute waiver of the jury trial right in an action in equity, provided, a jury trial is timely demanded. Similarly, in Hobbs v. Florida First
Nat'l Bank, 480 So. 2d 153 (Fla. 1st DCA 1963), the court held that the mixture of legal and equitable claims in the same case cannot deprive either of the parties of a right to a jury trial of issues traditionally triable by a jury as a matter of right. The court held that a defendant in a foreclosure case was entitled to a jury trial on legal issues when they could be separated from equitable ones.
While the Respondent has falsely claimed that “Raue fails to recognize that she expressly waived her right to a jury trial” [APPENDIX EXHIBIT D, pp. 6-7], two of the cases Respondent has relied on to misdirect the courts’ consideration of
Petitioner’s arguments clearly recognize that the mere existence of a jury trial waiver in a contract is not necessarily the beginning and end of the analysis of whether such a waiver can or should be enforced. In Vista Ctr. Venture v. Unlike
Anything, 603 So. 2d 576 (Fla. 5th DCA 1992), the court held:
A trial court commits reversible error when it chooses to ignore the
-30- parties' contractual waiver of a jury trial and orders a common law jury trial unless there is sufficient showing why the waiver should not be enforced. Credit Alliance Corp. v. Westland Machine Co., Inc., 439 So. 2d 332 (Fla. 3d DCA 1983). [Emphasis added.]
In Credit Alliance Corp. v. Westland Machine Co., Inc., supra, the court said:
The principal error alleged by Credit Alliance is the trial court's failure, in spite of a contractual waiver of trial by jury, to strike Westland's jury demand. Relying on section 672.302, Florida Statutes (1981), Westland argues that such a contractual provision, concededly buried in boiler plate, is unconscionable. We disagree. The contract in question was agreed to by experienced businessmen. There is no evidence of overreaching or unconscionability within the meaning of section 672.302. [Emphasis added.]
Section 672.302, Florida Statutes, provides:
(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
Petitioner repeatedly cited and argued guiding case law that warranted both lower courts’ recognition that the facts Respondent did not dispute or disprove do
-31- not support enforcement of the contractual jury trial waiver Respondent relied on.
But, the case law has not specifically or explicitly addressed the parties’ respective burdens of proof, or the procedural mechanism available to a homeowner in a foreclosure case to challenge the enforcement of a contractual jury trial waiver.
Thus, the two trial judges who considered Petitioner’s arguments that the jury trial waiver should not be enforced before there was a jury determination of whether the modification agreement was enforceable simply defaulted to their interpretation of the language of the jury trial waiver and the foreclosure division’s customary practice of denying jury trials in foreclosure cases.
In Basulto v. Hialeah Auto, 141 So.3d 1145 (Fla. 2014), this Court recognized and held that a term of a commercially unreasonable contract of adhesion should not be enforced to impair a litigant’s right of access to a court of law when there are issues of fraud and coercion in the inducement to enter into that contract. Although Basulto was decided in the context of a challenge to the enforcement of an arbitration clause in a car sales contract, there is no distinction to be found in this Court’s holding in Basulto between the result achieved by the enforcement of an arbitration agreement and the enforcement of a contractual jury trial waiver: enforcement of either denies a party access to a trial in a court of law.
The Court’s reasoning and holding in Basulto clearly applies to an
-32- examination of the enforcement of a contractual jury trial waiver just as it does to the enforcement of an arbitration agreement, where, as in Petitioner’s case, there is a challenge to the enforcement of a contract of adhesion procured by fraud and coercion. As the Court explained, inter alia, at pp. 1159-1161:
We agree with our district courts of appeal that procedural and substantive unconscionability must be established to avoid enforcement of the terms within an arbitration agreement. However, we conclude that while both elements must be present, they need not be present to the same degree. This balancing, or sliding scale, approach, which we adopt, is considered to be the prevailing view in Florida.
* * * * Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.
* * * *
Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Whether a meaningful choice is present in a particular case can only be determined by consideration of all the circumstances surrounding the transaction. In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power. The
-33- manner in which the contract was entered is also relevant to this consideration. Did each party to the contract, considering his obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print and minimized by deceptive sales practices? Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms. In such a case the usual rule that the terms of the agreement are not to be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.
When analyzing unconscionability, courts must bear in mind the bargaining power of the parties involved and the interplay between procedural and substantive unconscionability. In the typical case of consumer adhesion contracts, where there is virtually no bargaining between the parties, the commercial enterprise or business responsible for drafting the contract is in a position to unilaterally create one-sided terms that are oppressive to the consumer, the party lacking bargaining power. . . .
[Emphasis added.]
The lower courts’ failure in this case to recognize that the jury trial waiver at issue is/was not enforceable, given the undisputed facts Petitioner pleaded under oath, is in direct conflict with this Court’s holding and reasoning in Basulto.
-34- Under this Court’s reasoning in Basulto, the facts Petitioner repeatedly stated under oath that were not disputed or disproved by the Respondent required the lower courts to reject Respondent’s claimed right to enforce the jury trial waiver that was contained in Petitioner’s original mortgage and only included in the modification agreement by reference to the mortgage.
Given this Court’s explanation of what constitutes an unconscionable contract of adhesion, the question of whether Respondent could enforce the contractual jury trial waiver at issue should have been examined and determined prior to trial in the context of all the undisputed facts Petitioner set forth under oath in her pleadings. Those facts demonstrated that Respondent had come to a court of equity with unclean hands, seeking to foreclose a mortgage modified by an unreasonable contract of adhesion that was obtained by and through the fraud and coercion of Appellee’s servicing agents and attorneys.
V. CONCLUSION
In the prosecution of its foreclosure case, Respondent employed tactics to delay the case and misdirect the court’s consideration of Petitioner’s arguments in order to evade and avoid the lower courts’ scrutiny of the facts and evidence supporting Petitioner’s affirmative defenses and counterclaims that Respondent, its
-35- servicing agent and attorneys all knew were true. Respondent’s counsel successfully convinced the lower courts to ignore Respondent’s failure to dispute or disprove the facts Petitioner repeatedly stated under oath, both prior to trial and at trial, arguing that Petitioner’s unclean hands defense was just the whining of a deadbeat homeowner trying to avoid foreclosure.
But, even a deadbeat homeowner who is trying to avoid foreclosure has a due process right to be fairly heard by a jury on her fraud claims against a bank that is trying to steal her home. If this Court does not grant Petitioner the relief she requests, Respondent, acting by and through SPS and PEARSON BITMAN LLP, will have successfully “gamed the system” in the foreclosure division of the Orange
County Circuit Court, where jury trials just don’t happen and a foreclosing bank customarily gets to prove its case in 15 minutes through the testimony of a single witness who has no personal knowledge of the facts of the case. They will have successfully suppressed the truth and obtained a final judgment of foreclosure through litigation tactics that are nothing short of fraud. The Florida constitution,
Florida statutes and controlling case law should not permit such an unconscionable result to stand. Petitioner will be irreparably harmed if this Court does not grant her the relief she requests in this Petition.
WHEREFORE, Petitioner respectfully requests that this Court provide her
-36- the fundamental fairness and due process of law she was denied in the Orange
County Circuit Court and the Fifth District Court of Appeal, and grant her the relief she requests in this Petition.
Respectfully submitted,
/s/ JOHN P. GUIDRY, II JOHN P. GUIDRY II, Esquire Attorney for Petitioner Katherine E. Raue
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that, on this 15th day of June, 2018, a true and correct copy of this Petition and its Appendix was provided electronically to Allison
Morat, Esquire at [email protected]; [email protected]; and, Teris A. McGovern, Esquire at [email protected].
/s/ JOHN P. GUIDRY, II JOHN P. GUIDRY II, Esquire 320 N. Magnolia Avenue Suite B-1 Orlando, FL 32801 (407) 423-1117 Facsimile No: (407)423-1118 Florida Bar No. 0990086 [email protected] Attorney for Petitioner Katherine E. Raue
-37- CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this Petition complies with the font requirements of Rule 9.100, Florida Rules of Appellate Procedure, and is prepared in Times New
Roman, 14-point font.
I ALSO CERTIFY that an Appendix containing the documents referenced in this Petition has been prepared, and will be filed separately and served in accordance with Rules 9.100 and 9.220, Florida Rules of Appellate Procedure.
/s/ JOHN P. GUIDRY, II JOHN P. GUIDRY, III, ESQUIRE Attorney for Petitioner Katherine E. Raue
-38-