Aquasol Condo Assoc. v. HSBC Bank USA ( 2018 )


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  •       Third District Court of Appeal
    State of Florida
    Opinion filed August 15, 2018.
    Not final until disposition of timely filed motion for rehearing.
    ________________
    No. 3D17-352
    Lower Tribunal No. 13-29724
    ________________
    Aquasol Condominium Association, Inc.,
    Appellant,
    vs.
    HSBC Bank USA, National Association, etc.,
    Appellee.
    An Appeal from the Circuit Court for Miami-Dade County, Michael
    Hanzman and Rodolfo A. Ruiz, Judges.
    Jacobs Legal, PLLC, and Bruce Jacobs, for appellant.
    DeLuca Law Group, PLLC, and Shawn Taylor (Fort Lauderdale), for
    appellee.
    Before LAGOA, EMAS and FERNANDEZ, JJ.
    EMAS, J.
    INTRODUCTION
    Appellant, Aquasol Condominium Association, Inc. (“Aquasol”), appeals
    from a final judgment of foreclosure in favor of appellee, HSBC Bank USA, N.A.
    (“HSBC”), following a nonjury trial. We affirm, finding no merit in the issues
    raised by appellant, and write to discuss two of those issues.
    PROCEEDINGS BELOW
    In September 2013, HSBC filed an action to foreclose on a condominium
    unit in the Aquasol Condominium in Miami Beach.1 In January 2017, the case
    proceeded to a nonjury trial. At trial, there was no dispute that at the time it filed
    the instant action, HSBC was the holder of the note that was secured by a
    mortgage. HSBC introduced, without objection, the original note, which was in
    HSBC’s possession at the inception of the action.2
    Nevertheless, Aquasol contended during the trial that HSBC Bank could not
    establish standing to foreclose because it was required to prove it was the holder
    and owner of the note. After hearing Aquasol’s position in this regard, the trial
    court rejected the argument, advising counsel that under the law, HSBC was not
    1 At the time that HSBC filed its foreclosure action, the unit had already been
    foreclosed upon by Aquasol, and thus, Aquasol defended the action.
    2 Further, the evidence introduced at trial established that the original note came
    into HSBC’s possession indorsed in blank, and that HSBC subsequently indorsed
    the note to itself. See § 673.2051(3), Fla. Stat. (2013) (providing: “The holder may
    convert a blank indorsement that consists only of a signature into a special
    indorsement by writing, above the signature of the indorser, words identifying the
    person to whom the instrument is made payable.”)
    2
    required to establish it was the owner and holder of the note in order to establish
    standing, but must only establish that it was the holder or owner of the note.
    Nevertheless, counsel for Aquasol3 continued to press this position, and
    repeatedly attempted to question one of HSBC’s witnesses about whether HSBC
    owned the note. HSBC objected to the questions as irrelevant and the trial court
    sustained the objections and directed Aquasol’s counsel to move on to a new line
    of questioning. Aquasol’s counsel persisted nonetheless, through argument to (and
    with) the trial court and questions posed to the witness. The trial court advised
    counsel that the line of questioning was irrelevant, that the record had been
    preserved, and that if counsel continued this line of questioning, he would be held
    in contempt.
    At that point, Aquasol’s counsel orally moved for a continuance so he could
    prepare a written motion for disqualification of the trial judge, contending that the
    trial judge had “prejudged” the case. The trial judge denied the request for a
    continuance at that point, but took a recess shortly thereafter, advising Aquasol’s
    counsel he could prepare and submit a written motion for disqualification, and that
    the trial court would address the written motion when the trial resumed. When the
    trial judge returned to the bench, Aquasol’s counsel requested some additional time
    to complete the motion, which the trial court granted, and then denied a subsequent
    3   Counsel for Aquasol in this appeal also represented Aquasol at the trial.
    3
    request for further additional time. Thereafter, the written motion was presented to
    the trial judge, who denied it as legally insufficient.
    The trial proceeded to conclusion, and the trial court entered a final
    judgment of foreclosure in favor of HSBC, determining, inter alia, that HSBC had
    the requisite standing.4 Aquasol filed a motion for rehearing; however, that motion
    did not address in any fashion the trial court’s mid-trial denial of Aquasol’s motion
    for disqualification or denial of the motion for continuance.
    DISCUSSION AND ANALYSIS
    1. The Motion for Disqualification
    On appeal, Aquasol asserts that the trial court erred in denying its motion for
    disqualification. Generally, we review de novo a trial court’s order denying a
    motion for disqualification. Gregory v. State, 
    118 So. 3d 770
    , 778 (Fla. 2013). To
    the extent that Aquasol asserts error in the trial court’s denial of its motion for
    continuance or for further additional time (to prepare a written motion) we review
    this claim for an abuse of discretion. See Taylor v. Mazda Motor of Am., Inc., 
    934 So. 2d 518
    (Fla. 3d DCA 2005).
    A motion to disqualify a trial judge is properly denied where it is legally
    insufficient. Thompson v. State, 
    759 So. 2d 650
    , 659 (Fla. 2000). In order to be
    legally sufficient, “a motion to disqualify a judge ‘must be well-founded and
    4 Aquasol moved for an involuntary dismissal based on an asserted lack of
    standing, which the trial court denied.
    4
    contain facts germane to the judge’s undue bias, prejudice, or sympathy.’” 
    Id. (quoting Rivera
    v. State, 
    717 So. 2d 477
    , 480-81 (Fla. 1998)). Of significance, “an
    adverse ruling is not a legally sufficient ground to disqualify the trial judge.” 
    Id. at 660.
    See also, Lomax v. Reynolds, 
    119 So. 3d 562
    (Fla. 3d DCA 2013); Clark v.
    Clark, 
    159 So. 3d 1015
    (Fla. 1st DCA 2015) (noting: “It is well-settled that
    adverse rulings are insufficient to show bias”); Campbell Soup Co. v. Roberts, 
    676 So. 2d 435
    (Fla. 2d DCA 1995).
    In the instant case, there was no dispute—and Aquasol conceded—that
    HSBC Bank was the holder of the note at the inception of the case. Thus, there
    was nothing in this regard for the trial court to “prejudge,” as the parties were in
    agreement on this singular operative fact. The trial court’s conclusion that one’s
    status as a holder of the note is sufficient to confer standing was a legal
    determination made by the trial court after hearing significant argument from
    Aquasol’s counsel, not a factual determination made prior to presentation of the
    evidence. Accordingly, Aquasol’s motion to disqualify the trial judge was legally
    insufficient because it was premised on nothing more than its disagreement with an
    adverse legal ruling, and failed to establish that the court’s actions “would create in
    a reasonably prudent person a well-founded fear of not receiving a fair and
    impartial trial.” Rodriguez v. State, 
    919 So. 2d 1252
    , 1274 (Fla. 2005).
    5
    Further, the trial court did not abuse its discretion in denying a continuance
    to Aquasol. At the beginning of the trial, the trial court had a discussion with
    counsel for both parties regarding the legal issue of whether HSBC had standing if
    it was only the holder (but not the owner) of the note. As discussed previously, the
    trial court addressed this legal issue and stated its conclusion on the record.
    Thereafter, when Aquasol’s counsel began asking questions of HSBC’s witness
    that went to ownership of the note, HSBC objected to the questions as irrelevant.
    The trial court sustained the objections, as Aquasol had already conceded HSBC
    was the holder of the note at inception, and the trial court determined that, as a
    matter of law, this was sufficient to establish standing.
    Nevertheless, Aquasol’s counsel insisted on circling back to the legal
    determination previously made by the court, and persisted in pursuing the same
    line of questioning deemed irrelevant by the court. After the trial court sustained
    several more objections to this line of questioning, and advised counsel to stop
    pursuing this line of questioning (under pain of contempt),5 the following exchange
    took place:
    5 We commend the trial court for the patience it exhibited before resorting to the
    threat of sanctions. Though the transcript is but a cold record, it nevertheless
    reveals the heat (rather than light) brought by Aquasol’s counsel, who continued to
    defy the trial court’s previous rulings, continued to reargue legal positions
    previously decided, and continued to pursue a line of questioning ruled irrelevant.
    An attorney is not entitled to defy a court’s ruling merely because he thinks it
    incorrect, and can be held in contempt for such conduct even if it turns out the trial
    court’s ruling was erroneous. Rubin v. State, 
    490 So. 2d 1001
    , 1003 (Fla. 3d DCA
    6
    MR. JACOBS [counsel for Aquasol]: I'm just putting on
    the record, Your Honor, that I asked the Court to
    consider whether the Court has already pre-judged the
    case and has already decided the issues before hearing all
    the evidence and hearing all the facts, before hearing all
    my arguments, which, I think, the fact that Your Honor –
    THE COURT: What is your motion, Mr. Jacobs?
    MR. JACOBS: I'm asking the Court to continue this
    trial so that I can file a proper motion for disqualification,
    and I do that with a heavy heart—
    THE COURT: Okay, your motion's denied. Do you have
    any further questions for this witness?
    MR. JACOBS: I'm laying the record, please, Your
    Honor. The Florida Supreme Court instructs that when a
    lawyer makes a motion to disqualify a judge, because
    that motion must be in writing, I cannot make that
    motion for disqualification orally. I have to go back
    to my office, I have to prepare it, it has to be signed by
    the client, and then I can submit it to the Court, and if the
    Court finds that it's legally sufficient, or that it is legally
    sufficient on its face, then it must be granted.
    THE COURT: Your motion for continuance is denied.
    (Emphasis added.)
    1986) (holding: “It is well settled in this state, and elsewhere, that where a court
    acting with proper jurisdiction and authority renders an order, an aggrieved party's
    failure to abide by the order may be punished by contempt even if the order is
    ultimately found to be erroneous”); Ward v. State, 
    354 So. 2d 438
    , 439 (Fla. 3d
    DCA 1978) (holding: “The orderly conduct of a trial requires that a defendant and
    his attorney obey the rulings of the trial judge and appeal those rulings which are
    objectionable. A refusal to obey the rulings of the trial judge on the ground that
    the ruling is improper may result in the inability of the courts to administer
    justice.”)
    7
    Aquasol contends that, because counsel is not permitted to make an oral
    motion for disqualification during trial, the trial court was required to grant a
    continuance to allow him to file a written motion. Aquasol’s premise is incorrect,
    however, as this very circumstance is expressly provided for in Florida Rule of
    Judicial Administration 2.330(e):
    A motion to disqualify shall be filed within a reasonable
    time not to exceed 10 days after discovery of the facts
    constituting the grounds for the motion and shall be
    promptly presented to the court for an immediate ruling.
    Any motion for disqualification made during a
    hearing or trial must be based on facts discovered
    during the hearing or trial and may be stated on the
    record, provided that it is also promptly reduced to
    writing in compliance with subdivision (c) and promptly
    filed. A motion made during hearing or trial shall be
    ruled on immediately.6
    (Emphasis added.)
    Aquasol did not make an oral motion for disqualification, instead requesting
    a continuance of the trial to prepare a written motion. When the trial court denied
    the motion for continuance, Aquasol’s counsel should have, pursuant to the rule,
    orally stated its motion for disqualification on the record.      And although the
    requested continuance was denied at that point, the trial court shortly thereafter
    recessed the trial and advised counsel that he could take that opportunity to put his
    6 This provision, permitting an oral motion for disqualification during trial or
    hearing, was added by a 2003 amendment to the rule, see Amendments to the
    Florida Rules of Judicial Admin. (2-Year Cycle), 
    851 So. 2d 698
    (Fla. 2003),
    rendering inapposite the pre-amendment cases relied upon by Aquasol.
    8
    motion in writing and file it with the court. Upon returning to the bench to resume
    the trial, the trial court permitted counsel additional time to complete the written
    motion. Aquasol’s counsel requested further additional time, which the trial court
    denied, and we find no abuse of discretion in the trial court’s decision. Upon our
    review of the record, we conclude that Aquasol’s counsel was given a reasonable
    opportunity to make an oral motion for disqualification (which he did not do) and
    was given a reasonable opportunity to prepare and file a written motion for
    disqualification (which he did do and which was properly determined to be legally
    insufficient). We further note that Aquasol never filed a supplement to its written
    motion for disqualification, and in its motion for rehearing before the trial court,
    and its briefs on appeal, Aquasol failed to allege how it was prejudiced by the trial
    court’s denial of further additional time, and failed to proffer what other
    allegations it would have included in its written motion if allotted such further
    additional time.
    2. HSBC’s Standing to Foreclose
    This brings us to the corollary issue raised by Aquasol on appeal: that
    HSBC, as holder of the note, lacked standing to foreclose because it was not the
    holder and owner of the note. We review this question de novo. Sosa v. Safeway
    Premium Fin. Co., 
    73 So. 3d 91
    (Fla. 2011); Wells Fargo Bank, N.A. v. Morcom,
    
    125 So. 3d 320
    (Fla. 5th DCA 2013). We conclude, as this court and our sister
    9
    courts have previously held, that HSBC had standing to foreclose if at the time of
    filing the action it was the holder or owner of the note.
    We begin by pointing out that this issue was recently addressed by this court
    in HSBC Bank USA, N.A. v. Buset, 
    241 So. 3d 882
    (Fla. 3d DCA 2018). In its
    briefs, however, Aquasol has failed even to acknowledge, much less address, the
    Buset opinion.7     This is all the more curious given the fact that counsel for
    Aquasol was also counsel of record for Buset in that appeal, so it is difficult to
    fathom how this failure could be attributed to mere oversight.         We take this
    opportunity to remind Aquasol’s counsel that the Rules of Professional Conduct
    mandate candor toward the tribunal. See Rule Regulating the Florida Bar 4-
    3.3(a)(3), which provides that “[a] lawyer shall not knowingly . . . fail to disclose
    to the tribunal legal authority in the controlling jurisdiction known to the lawyer to
    be directly adverse to the position of the client and not disclosed by opposing
    counsel.” See Dilallo v. Riding Safely, Inc., 
    687 So. 2d 353
    , 355 (Fla. 4th DCA
    1997) (observing that “the Rules of Professional Conduct of the Florida Bar
    require candor toward the tribunal, and a duty of competence. Rule 4–1.1 and Rule
    4–3.3(3) imply a duty to know and disclose to the court adverse legal authority.”)
    7 Our opinion in Buset was released on January 7, 2018. The initial brief in the
    instant appeal was filed on April 10, 2018. The reply brief was filed on June 18,
    2018. Although Buset was still pending rehearing at the time, it nevertheless was
    binding precedent, and Aquasol was duty-bound to cite it. See Rock v. State, 
    800 So. 2d 298
    (Fla. 3d DCA 2001); Kraay v. State, 
    148 So. 3d 789
    (Fla. 1st DCA
    2014).
    10
    See also Lieberman v. Lieberman, 
    160 So. 3d 73
    (Fla. 4th DCA 2014) (awarding
    appellate attorney’s fees as a sanction for counsel’s failure to acknowledge clear
    and unambiguous controlling case law directly adverse to his client’s position,
    resulting in unnecessary and protracted litigation).
    Our opinion in Buset was issued just three days before trial commenced in
    the instant case. In fact, Aquasol’s counsel took the same position he urged in
    Buset, contending that HSBC was required to prove it held and owned the note.
    The trial court then correctly noted our recent rejection of that argument:
    MR. JACOBS: It has been the law since the late 1800s,
    Florida Supreme Court precedent says that you must
    prove you own and hold the note and mortgage. And that
    law has been shifted, I think, in an unconstitutional way
    in foreclosures.
    THE COURT: You'll preserve that for appeal because
    our appellate court just said [in Buset] you either have to
    own or hold the note.
    As the trial court accurately noted, we held in 
    Buset, 241 So. 3d at 888-89
    :
    Because a foreclosure case is an action to enforce a
    negotiable instrument, standing in a foreclosure case is
    not based upon ownership of the note; it is based instead
    on whether the plaintiff is a “person entitled to enforce.”
    § 673.3011. The term “person entitled to enforce” is a
    technical, defined term in all versions of the Uniform
    Commercial Code, including Florida's. 
    Id. An entity
    may
    qualify as a “person entitled to enforce” for several
    reasons, but the most common reason is that the entity is
    “the holder of the instrument.” 
    Id. In a
    case where the
    plaintiff is asserting standing based upon its status as a
    “person entitled to enforce” because it is the holder of the
    11
    instrument, proof of who owns the note is not necessary
    or even relevant to the issue of standing. 
    Id. (“A person
                 may be a person entitled to enforce the instrument even
    though the person is not the owner of the instrument or is
    in wrongful possession of the instrument.”)
    Proof of who owns the note, such as a chain of title, may
    be relevant to a dispute where a person claims his or her
    ownership interest trumps the interest of the holder, but
    the borrower cannot make this argument on its own;
    instead, the person making that claim must be “joined in
    the action and personally assert[ ] the claim against the
    person entitled to enforce the instrument.” § 673.3051(3).
    Even then, ownership is not relevant to standing so much
    as the question of who is the ultimate beneficial owner of
    the proceeds of the foreclosure, an issue not normally or
    necessarily part of a foreclosure case. (Footnote omitted).
    Our decision in Buset is consistent with the decisions of our sister courts.
    See e.g., Wilmington Savings Fund Society, FSB v. Louissaint, 
    212 So. 3d 473
    ,
    475-76 (Fla. 5th DCA 2017)(holding: “‘A person entitled to enforce the note and
    foreclose on a mortgage is the holder of the note, a non-holder in possession of the
    note who has the rights of a holder, or a person not in possession of the note who is
    entitled to enforce under section 673.3091, Florida Statutes.’” (quoting Gorel v.
    Bank of N.Y. Mellon, 
    165 So. 3d 44
    , 46 (Fla. 5th DCA 2015)))                  “‘If an
    indorsement is made by the holder of an instrument and it is not a special
    indorsement, it is a “blank indorsement.” When indorsed in blank, an instrument
    becomes payable to bearer and may be negotiated by transfer of possession alone
    until specially indorsed.’” (citing § 673.2051(2), Fla. Stat. (2015)). “‘[U]nder the
    12
    Uniform Commercial Code, a plaintiff is not required to be both the owner and
    holder of the note in order to have standing to foreclose’” (quoting Tilus v. AS
    Michai, LLC, 
    161 So. 3d 1284
    , 1285-86 (Fla. 4th DCA 2015))); Phan v. Deutsche
    Bank Nat. Trust Co., ex rel. First Franklin Mortg. Loan Trust 2006-FF11, 
    198 So. 3d
    744 (Fla. 2d DCA 2016); Meilleur v. HSBC Bank USA, N.A., 
    194 So. 3d 512
    (Fla. 4th DCA 2016); 
    Tilus, 161 So. 3d at 1285-86
    (holding: “The plaintiff must
    prove that it had standing to foreclose at the time the lawsuit was filed. We clarify,
    however, that under the Uniform Commercial Code, a plaintiff is not required to be
    both the owner and holder of the note in order to have standing to foreclose.
    Instead, the plaintiff may establish standing by showing that it owns or holds the
    note, or is otherwise entitled to enforce the note” (internal citations and footnote
    omitted)); Murray v. HSBC Bank USA, 
    157 So. 3d 355
    (Fla. 4th DCA 2015);
    Lewis v. J.P. Morgan Chase Bank, 
    138 So. 3d 1212
    (Fla. 4th DCA 2014); Stone
    v. BankUnited, 
    115 So. 3d 411
    (Fla. 2d DCA 2013); U.S. Bank Nat. Ass’n v.
    Knight, 
    90 So. 3d 824
    , 826 (Fla. 4th DCA 2012)(observing: “Thus, to have
    standing, an owner or holder of a note, indorsed in blank, need only show that he
    possessed the note at the institution of a foreclosure suit; the mortgage necessarily
    and equitably follows the note.”); McLean v. JP Morgan Chase Bank Nat’l Ass’n,
    
    79 So. 3d 170
    (Fla 4th DCA 2012); Riggs v. Aurora Loan Servs., LLC, 
    36 So. 3d 932
    (Fla. 4th DCA 2010); Mazine v. M & I Bank, 
    67 So. 3d 1129
    , 1131 (Fla. 1st
    13
    DCA 2011) (“Because a promissory note is a negotiable instrument and because a
    mortgage provides the security for the repayment of the note, the person having
    standing to foreclose a note secured by a mortgage may be either the holder of the
    note or a nonholder in possession of the note who has the rights of a holder.”);
    Taylor v. Deutsche Bank Nat. Trust Co., 
    44 So. 3d 618
    (Fla. 5th DCA 2010).
    In support of its position, Aquasol relies upon Florida Supreme Court
    decisions from the late 1800’s and early 1900’s. As our sister courts have done,
    we reject this argument, as those decisions were based upon the then-existing
    common law, long before the Legislature’s adoption of the Florida Uniform
    Commercial Code, including Chapter 673 (entitled “Uniform Commercial Code:
    Negotiable Instruments”), which governs the issue presented. See, e.g., 
    Morcom, 125 So. 3d at 322
    (noting: “Appellees cite Florida Supreme Court precedent dating
    back to the late 1800s to suggest Appellant must both hold and own the note and
    mortgage to satisfy the standing requirement for a foreclosure action. The cases
    Appellees cite are not persuasive because the supreme court decided the cases prior
    to the adoption of the now-instructive and binding Florida UCC”); Tilus, 
    161 So. 3d
    at 1286.
    Affirmed.
    14