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Appellate court rules that Bank that was in actual possession of the promissory note had standing to foreclose even though there was no valid assignment of mortgage

Lippi executed a mortgage and promissory note in favor of Fremont Investment and Loan. Fremont was the original lender and holder of the note, but MERS was the mortgagee. Lippi defaulted on the note after Deutsche Bank purportedly obtained
an assignment from MERS. Deutsche Bank filed suit, seeking mortgage foreclosure. Copies of the note and mortgage attached to the complaint identified Fremont as the lender, and the complaint alleged Deutsche Bank was the holder of the note and mortgage. Lippi moved to dismiss, arguing that Deutsche Bank lacked
standing. The trial court granted the motion and gave Deutsche Bank 15
days to amend. A month later, Deutsche Bank filed an amended complaint, along
with a copy of the assignment, note, and mortgage, and alleged that Deutsche Bank owned the note and mortgage. Deutsche Bank then filed the original mortgage and note, which included a blank endorsement from Fremont. Lippi moved to dismiss the amended complaint with prejudice because it was not timely filed, Deutsche Bank was not the actual owner of the note or real party in
interest, and the assignment was invalid because it was executed after
the lawsuit was filed and the assignor was not MERS as nominee for
Fremont. The trial court granted the motion and dismissed the complaint,
again giving Deutsche Bank 15 days to amend. Deutsche Bank timely
filed a second amended complaint, which alleged that it was the holder
of the note and mortgage and/or was entitled to enforce the note and
mortgage, and attached a copy of the note, mortgage, and assignment.
Lippi filed a third motion to dismiss with prejudice and requested the
circuit court sanction Deutsche Bank for its behavior during the case.
The trial court granted the motion to dismiss with prejudice and concluded
that Deutsche Bank and its counsel willfully violated its orders and that
sanctions were appropriate. The court therefore dismissed Deutsche
Bank’s second amended complaint with prejudice, struck Deutsche
Bank’s pleadings, and entered a judgment in Lippi’s favor.
On appeal the Fifth District Court reversed the trial court’s order dismissing the complaint with prejudice, holding that Deutsche Bank had established its standing as the note holder, regardless of any recordedassignments. The appellate court also held that dismissal with prejudice was unwarranted in this case and less severe sanctions should have been considered.

Deutsche Bank Nat. Trust Co. v. Lippi,

37 Fla. L. Weekly D201

(Fla. 5th DCA 2012)

reprinted from The Fund Concept March 2012