Foreclosure case before Florida Supremes could have big consequences

May 11, 2012

The Florida Supreme court is considering what some call the most important foreclosure case in the country.  Regan McCarthy reports the justices are looking into whether banks should be allowed to re-file a case, if the lawsuit they originally filed used fraudulent documents. 

Experts say the Florida Supreme court’s ruling stands to affect mortgages across the state and could result in possibly thousands of foreclosure cases being re-opened. It started with one man—a dry wall hanger named Roman Pino who bought a home in Greenacres, then started falling behind on his mortgage. The bank started proceedings to foreclose, but Pino sued saying the bank had used fraudulent documents in the case.  The bank dismissed the case and filed again, but eventually settled with Pino. Now, Pino’s lawyer,  Amanda Lundergan says the case is bigger than Pino.

“This is not about Mr. Pino, this is about the bank and the fraud that was committed.”

The Supreme court has agreed to look into the matter, noting there are “many mortgages that appear to be tainted with suspect documents.” And Lundergan agrees.

“This court will never know the facts of how deep the fraud went. We only know the tip of the iceberg and that’s exactly why we’re here.”

Lundergan says a Florida law, which allows plaintiffs to dismiss a case once and bring it back later isn’t intended to be a “shield.”

“It sets up a system whereby every litigant who comes before our courts has not only been condoned, but encouraged to lie, to steal, to cheat, knowing that if they’ re caught, if they are caught, they can simply voluntarily dismiss and absolve themselves of that fraud.”

But Justice Barbara Pariente points out that the law, which is called voluntary dismissal, reaches far beyond mortgage foreclosure cases.

“What you’re really asking us to do, and this is where my concern is; you’re really asking us to change the way the rule on voluntary dismissal operates.”

Generally voluntary dismissal used for valid reasons like correcting a clerical error or an honest mistake made by one of the lawyers on the case. And that’s one reason the lawyer for the bank, Bruce Rogow, says the law is needed.

“We have not had the problems. I mean this has gone on because it’s a foreclosure case and because there are a lot of those cases it has attracted a lot of attention. But I think we have to look at this in the interest of general civil litigation. And this has not been a problem in general civil litigation. And so there needs to be no change in the law.”

And Rogow adds that there are other to methods the court can use the address the issue of fraud. 

“There is a sanction of a referral to the bar association, which would be another sanction. There could be fees imposed in the second case if a second case is brought where there is a contract as there is here. So there are sanctions that can be imposed. We’re not saying that there should be no sanctions if indeed there is a submission to the court that is an improper submission to the court.”

Rogow argues the fraudulent documents were created during the robo-signing scandal by law firms that hired workers to sign foreclosure documents without really checking them, and not the banks. Though the court points out there really is no clear evidence either way.  The justices didn’t indicate when they plan to rule in the case.