DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
NERMINE HANNA,
Appellant,
v.
PENNYMAC HOLDINGS, LLC; PATRICIA T. CONNOR; Unknown Tenant
#1, n/k/a ROBERT DAVIS; GARDEN VILLAS TOWNHOUSES
HOMEOWNER'S ASSOCIATION, INC.; VILLAGE OF PALM SPRINGS,
FLORIDA; Unknown Tenant #3, n/k/a ANNIE WILLS; Unknown Tenant
#4; Unknown Tenant #2, n/k/a ROBERT DAVIS; Any and All Unknown
Parties Claiming By, Through, Under and Against The Named Individual
Defendant(s) Who Are Not Known To Be Dead or Alive, Whether
Unknown Parties May Claim An Interest As Spouses, Heirs, Devisees,
Grantees, or Other Claimants,
Appellees.
No. 4D18-1400
[March 27, 2019]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Edward A. Garrison, Judge; L.T. Case No. 50-2016-CA-
005167-XXXX-MB.
James R. Ackley of the Law Offices of James R. Ackley, P.A., West Palm
Beach, for appellant.
Jason F. Joseph of the Tromberg Law Group, P.A., Boca Raton, for
appellee PennyMac Holdings, LLC.
CIKLIN, J.
Nermine Hanna appeals a final summary judgment of foreclosure and
raises several issues. We affirm as to all of them but write to address her
claim that there was a genuine issue of material fact as to standing which
we find to be unavailing.
Hanna’s purchase of the property underlying this appeal arose out of
foreclosure proceedings brought against the property’s former owner by
the homeowner’s association. After Hanna purchased the property, the
appellee, PennyMac Holdings, LLC (“the bank”), brought a foreclosure suit
naming the former owner and Hanna, among others, as defendants, and
alleging that the former owner had defaulted on the note. The bank alleged
it held the note, which contained an endorsement in blank by the lender.
The former owner consented to the entry of a final judgment of
foreclosure, and the bank moved for summary judgment. In Hanna’s
response to the motion, she argued that the bank did not have standing
as holder of the note, because the note was not negotiable. The trial court
entered summary judgment in favor of the bank.
Hanna contends the note is not negotiable because it does not contain
a promise to pay a fixed amount of principal. See § 673.1041(1), Fla. Stat.
(2016) (defining “negotiable instrument” in part as “an unconditional
promise or order to pay a fixed amount of money, with or without interest
or other charges described in the promise or order”); Nagel v. Cronebaugh,
782 So. 2d 436, 439 (Fla. 5th DCA 2001) (“In order for an instrument to
be negotiable under the UCC, it must contain an unconditional promise to
pay a sum certain.”). Hanna argues that because the note was not
negotiable, the bank could not establish its standing as the holder of the
instrument pursuant to section 673.3011(1), Florida Statutes (2016). See
Murray v. HSBC Bank USA,
157 So. 3d 355, 358 (Fla. 4th DCA 2015)
(recognizing that pursuant to section 673.3011, Florida Statutes, the
“holder of the instrument” may enforce an instrument, and that pursuant
to section 671.201(21)(a), Florida Statutes, a “holder” is a “person in
possession of a negotiable instrument that is payable either to bearer or
to an identified person that is the person in possession”).
The promissory note in this case provides the following in relevant part:
“In return for a loan that I have received, I promise to pay U.S. $156,800.00
plus any amounts added in accordance with Section 4 (G) below, (this
amount is called ‘Principal’), plus interest, to the order of the Lender.”
Hanna argues that the following language appearing at the top of the first
page of the note renders it non-negotiable:
THIS NOTE CONTAINS PROVISIONS ALLOWING FOR
CHANGES IN MY INTEREST RATE AND MY MONTHLY
PAYMENT. MY MONTHLY PAYMENT INCREASES WILL HAVE
LIMITS WHICH COULD RESULT IN THE PRINCIPAL AMOUNT
I MUST REPAY BEING LARGER THAN THE AMOUNT I
ORIGINALLY BORROWED, BUT NOT MORE THAN 125% OF
THE ORIGINAL AMOUNT (OR $196,000.00). MY INTEREST
RATE CAN NEVER EXCEED THE LIMIT STATED IN THIS
NOTE OR ANY RIDER TO THIS NOTE. A BALLOON PAYMENT
MAY BE DUE AT MATURITY.
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The paragraph appears to reference a provision of the note related to
amortization. Section 4(G) of the note contains the following provision:
(G) Changes in My Unpaid Principal Due to Negative
Amortization or Accelerated Amortization
Since my payment amount changes less frequently than
the interest rate and since the monthly payment is subject to
the payment limitations described in Section 4(F), my monthly
payment could be less or greater than the amount of the
interest portion of the monthly payment that would be
sufficient to repay the unpaid Principal I owe at the monthly
payment date in full on the maturity date in substantially
equal payments. For each month that the monthly payment
is less than the interest portion, the Note Holder will subtract
the monthly payment from the amount of the interest portion
and will ad[d] the difference to my unpaid Principal, and
interest will accrue on the amount of this different at the
current interest rate. For each month that the monthly
payment is greater than the interest portion, the Note Holder
will apply the excess towards a principal reduction of the Note.
Hanna does not address this provision or Section 4(F), which it
references. While no Florida state appellate case addresses the
negotiability of a note containing provisions related to amortization, a
Washington appellate court has squarely addressed the issue and has
found that such a provision does not render the note non-negotiable.
In Bucci v. Northwest Trustee Services, Inc.,
387 P.3d 1139, 1141 (Wash.
Ct. App. 2016), the appellant executed an adjustable rate note promising
to pay a specified amount “plus any amounts added in accordance with
Section 4(G) below, (this amount is called ‘Principal’), plus interest.” The
note also contained a provision that has substantially similar language to
the paragraph relied on by Hanna in this appeal. See
id. The note
contained other provisions relating to changes in the interest rate and
monthly payment amount and, as in the instant case, a Section 4(G),
which is substantially similar to the Section 4(G) in this case. See id. at
1141-42. Bucci filed suit, seeking declaratory and injunctive relief to
prevent a nonjudicial foreclosure and sale. Id. at 1143. The trial court
entered summary judgment in favor of the defendant. Id. On appeal,
Bucci argued that a negative amortizing note is not a negotiable
instrument under Washington’s UCC because the note provided for
changes in the principal amount. Id. at 1144. The court rejected the
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argument, reasoning that the note “describes Bucci’s obligations on its
face,” as it defined the principal as “$1,530,000.00 plus any amounts
added in accordance with 4(G) below . . . plus interest,” and it “fully
discloses how interest accrual may result in negative amortization,
depending on the amount Bucci chooses to make as a monthly payment.”
Id. at 1146. Further:
Negative amortization only occurs under the note if Bucci
chooses not to pay the full amount of interest due each month
and only if the monthly payment is insufficient to cover the
accrued interest. Bucci’s note provides for a monthly
payment, but Bucci is not limited to paying only the monthly
payment amount. The note expressly permits Bucci to make
prepayments towards the principal.
37 RCW 62A.3-104(a) defines a negotiable instrument as
“an unconditional promise or order to pay a fixed amount of
money, with or without interest or other charges described in
the promise or order.” RCW 62A.3-104(a). Because Bucci’s
note contains an unconditional promise to pay a fixed amount
of $1.53 million plus any amounts added in accordance with
the provisions in Section (4)(G) of the note, it is a negotiable
instrument as defined in RCW 62A.3-104(a).
Id.
We find Bucci’s reasoning persuasive. The relevant provisions of the
Washington UCC are substantially similar to the Florida UCC. We reject
the contention that the paragraph at the top of the first page of the note,
standing alone, renders the note non-negotiable.
Affirmed.
MAY and KLINGENSMITH, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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