Brannock Humphries & Berman Obtains Second Reversal in Long-Running Foreclosure Case
Five-and-a-half years after the Second District Court of Appeal reversed the dismissal of a foreclosure lawsuit on statute of limitations grounds, the appellate court once again reversed the trial court’s dismissal of the case, this time ruling that the lower court incorrectly determined that the plaintiff, Foley & Lardner LLP, lacked standing to foreclose.
The case has a complex history, including several bankruptcies, multiple loan servicers, and transferred interests in the loan itself. Suffice it to say that the genesis of the litigation is a $29 million condominium project, the developer’s default on the loan that financed the project, and the title insurer’s failure to obtain releases from the loan as to individual condominium unit owners. Ultimately, one of the owners of the loan took over as the asset manager and was granted broad authority to remediate the property, including to foreclose on the loan. That entity then delegated its duties to another entity, which later initiated foreclosure proceedings. Foley & Lardner eventually stepped into the shoes of the plaintiff.
The legal issue presented was whether Foley & Lardner’s predecessor had standing to bring the foreclosure action. The answer turned on whether various contracts granted the asset manager the authority to delegate its ability to foreclose and whether the asset manager did in fact delegate this authority. If so, everyone agreed that Foley & Lardner had standing to pursue the case.
Fully embracing the contract interpretation arguments advanced by Brannock Humphries & Berman in written briefing and during an oral argument in February, the Second District held that the asset manager was permitted to delegate the authority to foreclose and effectuated that delegation to Foley & Lardner’s predecessor. Thus, the appellate court ruled that Foley & Lardner had standing and that the trial court had erroneously dismissed the lawsuit. The case will now once again return to the trial court to be litigated on the merits.