PEGGY A. THORLTON v. NATIONSTAR MORTGAGE, L L C

257 So. 3d 596

• Court: District Court of Appeal of Florida
• Decided: October 17, 2018
• Docket: 17-2328
• Status: Published

Opinion

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

IN THE DISTRICT COURT OF APPEAL

OF FLORIDA

SECOND DISTRICT

PEGGY A. THORLTON and WILLIAM D. ) THORLTON, ) ) Appellants, ) ) v. ) Case No. 2D17-2328 ) NATIONSTAR MORTGAGE, LLC, ) ) Appellee. ) )

Opinion filed October 17, 2018.

Appeal from the Circuit Court for Highlands County; Michael R. Raiden, Judge.

Randall O. Reder of Randall O. Reder, P.A., Tampa, for Appellants.

Nancy M. Wallace and Ryan D. O'Connor of Akerman LLP, Tallahassee; William P. Keller of Akerman LLP, Fort Lauderdale; and David A. Karp of Akerman LLP, Tampa, for Appellee.

MORRIS, Judge.

Peggy A. and William D. Thorlton appeal the final judgment of foreclosure

entered against them and in favor of Nationstar Mortgage, LLC, following a bench trial.

For the reasons we explain, we conclude that Nationstar adequately established that its predecessor in interest, Chase Home Finance a/k/a JPMorgan Chase Bank National

Association satisfied a condition precedent to filing suit: providing written notice of

default as required by paragraph 22 of the mortgage. Thus we affirm on that issue. We

affirm on all other issues without further comment.

BACKGROUND

On May 13, 2003, the Thorltons executed a promissory note and

mortgage in favor of Wachovia Mortgage Corporation. Paragraph 22 of the mortgage

provided that prior to acceleration, the lender must give the borrower notice and an

opportunity to cure the default. Paragraph 15 provided that any such notice must be

written and that it "shall be deemed to have been given to Borrower when mailed by first

class mail or when actually delivered to Borrower's notice address if sent by other

means."

In 2008, Chase Home Finance filed a foreclosure complaint against the

Thorltons. Chase alleged that it was the servicer of the loan and acting on behalf of the

owner. That complaint alleged generally that all conditions precedent to the

acceleration of the note and mortgage had been performed.

Chase subsequently filed two motions for substitution of party plaintiff,

alleging first that it had merged with JPMorgan Chase Bank N.A. and, at a later time,

that it had become organized under a new charter and had changed its name to

JPMorgan Chase Bank, National Association. In July 2016, prior to trial, a motion to

substitute Nationstar as the party plaintiff was filed and ultimately granted.

At trial, Nationstar admitted a copy of the default letter purportedly mailed

to the Thorltons on October 2, 2008, in compliance with paragraph 22. The letter

-2- contained a header proclaiming "CERTIFICATE OF MAILING." As part of the same

exhibit, Nationstar included a screenshot from Chase's electronic records indicating that

the default letter was scanned into Chase's system on October 3, 2008. The exhibit

was admitted through the testimony of Jason George, a default case specialist

employed by Nationstar. Mr. George testified that he had previously worked for

JPMorgan Chase and, prior to that, worked for Chase Home Finance before the two

entities merged. Mr. George testified he worked for Chase from July 2011 until March

2015. He testified generally about his familiarity with Chase's practices and procedures

for creating and maintaining records as well as his familiarity with the boarding process

that occurs when one lender takes over the servicing of a loan from another lender.

Prior to the admission of the default letter, the Thorltons' counsel objected

based on "hearsay, lack of foundation, and lack of personal knowledge." Specifically,

the Thorltons' counsel argued that Mr. George did not have personal knowledge of

whether the letter was actually mailed out, regardless of whether it was mailed by

Chase or by a third-party vendor.1 The Thorltons' counsel also argued that Mr. George

was not qualified to lay a business records predicate for the admission of the document

when the letter was mailed "by yet another department of the company that he

apparently spoke to someone about." The trial court overruled the objection and

admitted the letter.

During questioning about the letter, Mr. George testified that the letter was

part of Nationstar's business records that had previously been part of Chase's business

records. He testified that the records were made by employees with personal

1The Thorlton's counsel explained to the court that the use of a third-party vendor to mail out default letters was common in the mortgage industry.

-3- knowledge of the information being entered at the time it was entered, that the records

were kept in the course of Chase's regularly-conducted business activities, and that it

was Chase's regular business practice to make and maintain such records. When

asked how he knew that the letter was mailed to the Thorltons, Mr. George responded:

"That was the routine practice back then for Chase Home Finance."

On cross-examination, Mr. George testified that he worked in multiple

departments with Chase and Nationstar, including two days in Chase's breach letter

department. Mr. George acknowledged that Chase used a third-party vendor to mail

the breach letters and that he knew this because he worked with the third-party vendor

during his training. Mr. George explained that the third-party vendor obtains a PDF

copy of the breach letter from the lender, prints and mails it first class, and then sends a

CD back to the lender informing the lender that the letter was mailed. Mr. George

explained that the lender also receives proof of mailing via a copy of each letter with a

"proof of mailing stamp from the post office." Mr. George subsequently admitted that he

did not work for the third-party vendor at the time that the Thorltons' breach letter was

mailed and that he never actually worked for the third-party vendor. He explained that

his knowledge about the third-party vendor's mailing process came through his two-day

assignment in Chase's breach letter department. He also explained that his knowledge

about the third-party vendor's mailing process came entirely from other Chase

employees who told him about the third-party vendor.

On appeal, the Thorltons challenged the sufficiency of the evidence

regarding the mailing of the default letter. Specifically, the Thorltons argued that

because Mr. George did not work for Chase at the time the letter was mailed, he could

-4- not have personal knowledge of that issue and, as a result, Nationstar failed to prove it

complied with the condition precedent set forth in paragraph 22 of the mortgage.

In response, Nationstar argued that Mr. George's testimony regarding

Chase's routine business practices was sufficient to establish that the letter was mailed.

Nationstar asserted that Mr. George was not required to have worked for Chase at the

time the letter was mailed in order to establish his knowledge of Chase's routine

business practices.

After all briefs had been filed in this case, this court issued Spencer v.

Ditech Financial, LLC, 242 So. 3d 1189 (Fla. 2d DCA 2018). In Spencer, this court

addressed the issue of what constitutes sufficient evidence to establish the mailing of a

default letter when the testifying witness was not a current employee of and had never

worked for the entity which drafted and mailed the letter. Id. At oral argument, the

Thorltons noted the Spencer opinion and argued that it also served as a basis to

reverse in this case because like the employee in Spencer, Mr. George did not work for

the entity which mailed the letter. The Thorltons filed a notice of supplemental authority

citing Spencer on the same day that oral argument occurred.

This court then issued an order directing the parties to address Spencer

and its application to this case. The Thorltons' supplemental brief noted that their

counsel had raised an objection to the sufficiency of Mr. George's knowledge of the

mailing issue at trial, and the Thorltons argued that Spencer was directly on point and

required a reversal here because Mr. George testified that his knowledge of the mailing

of the letter was based merely on his training and the routine business practices of

Chase. Thus, the Thorltons argued that because Mr. George had never worked for the

-5- third-party vendor which actually mailed the letter and because his knowledge of the

third-party vendor's mailing process had been obtained from other Chase employees,

the evidence was insufficient to establish that the letter had been mailed.

In its supplemental brief, Nationstar argued that the Thorltons waived any

challenge to Mr. George's testimony regarding routine business practices, arguing that

the Thorltons only objected to the admission of the default letter as a business record.

Nationstar also argued that this issue was not one related to the sufficiency of the

evidence. Instead, Nationstar maintained that the issue was an evidentiary issue

related to routine business practices under section 90.406, Florida Statutes (2016), or

lack of personal knowledge under section 90.604. Nationstar distinguished Spencer by

arguing that there, the testifying witness had never worked for the entity (prior servicer)

which drafted the default letter, whereas, in this case, Mr. George had worked for

Chase, the entity which drafted the default letter. Nationstar pointed to parts of Mr.

George's testimony wherein he described working "at three different stations" in the

breach letter department and observing how breach letters were submitted to the third-

party vendor for mailing and then how Chase received proof of mailing from the third-

party vendor. Thus Nationstar argued that Mr. George's testimony was sufficient under

Spencer. Citing other cases, Nationstar also argued that testimony regarding routine

business practices related to the drafting and mailing of default letters was sufficient to

prove the letter was actually mailed.

ANALYSIS

Addressing first the issue of preservation, we reject Nationstar's attempt to

frame this issue as one involving only evidentiary considerations related to the

-6- admissibility of a business record. In its answer brief, Nationstar relied on Bank of

America, N.A. v. Delgado, 166 So. 3d 857 (Fla. 3d DCA 2015), to argue that Mr. George

was not required to be employed by Chase at the time the default letter was mailed in

order to provide a foundation for the admission of Nationstar's business records. And in

its supplemental answer brief, Nationstar argued that the issue in this case was not one

related to the sufficiency of the evidence regarding the Thorltons' receipt of the default

letter. However, Spencer holds otherwise. Indeed, in Spencer, we specifically rejected

the appellants' reliance on Delgado, noting that it addressed the sufficiency of the

evidence of an entity's boarding process to establish the admissibility of documents like

default letters under the business records exception to the hearsay rule, whereas in

Spencer, the issue was the sufficiency of the evidence demonstrating an entity's routine

business practices to establish that a default letter was mailed. See Spencer, 242 So.

3d at 1191. We do not disagree with Nationstar's argument that "basic familiarity with

[another entity's] practices for generating, storing, and sending a default [letter] in the

normal course of business is all that is required to establish the admissibility of a default

[letter] under the business records exception," but as in Spencer, the admissibility of the

default letter is not at issue here. See id.

Further, the fact that the Thorltons did not raise the precise issue raised in

Spencer below does not preclude them from raising the issue on appeal. As we noted

in Wolkoff v. American Home Mortgage Servicing, Inc., 153 So. 3d 280, 282 (Fla. 2d

DCA 2014), Florida Rule of Civil Procedure 1.530(e) permits parties to raise the issue of

the sufficiency of the evidence on appeal even where they did not make such an

objection below. While it is true that "[b]asic principles of due process suggest that

-7- courts should not consider issues raised for the first time at oral argument," courts also

acknowledge that there are "[r]are or unusual instances" where an appellate court may

consider arguments raised for the first time on appeal. Powell v. State, 120 So. 3d 577,

591, 593 (Fla. 1st DCA 2013); see also Wolkoff, 153 So. 3d at 282 (recognizing that

courts have ability to consider arguments raised for the first time at oral arguments in

limited circumstances). This case presents one such circumstance, where a case which

addresses an issue presented in this case was decided after all briefing had been

completed in this case. Furthermore, we provided both parties with the opportunity to

address the proof of mailing issue in supplemental briefs. Thus no due process

violation has occurred and we may dispose of this issue on the merits.

Having analyzed the facts and holdings of both Spencer and a

subsequently decided case, Soule v. U.S. Bank National Ass'n, 43 Fla. L. Weekly

D1590 (Fla. 2d DCA July 13, 2018), we conclude that they do not require a reversal in

this case. Rather, we hold that Mr. George's testimony was sufficient to establish that

the default letter was mailed.

Spencer requires not only that a testifying witness "be employed by the

entity drafting the letter," but also that the witness "have firsthand knowledge of the

company's routine practice for mailing letters." Spencer, 242 So. 3d at 1191 (emphasis

added). Prior to his employment with Nationstar, Mr. George was employed by Chase,

which was the entity that drafted the default letter. Mr. George also had knowledge of

Chase's routine practice of submitting the letters for mailing to a third-party vendor. He

explained what those practices were at the time the subject default letter was mailed out

even though he was not in Chase's employ at that time.

-8- That point is where this case factually differs from Spencer. The issue in

Spencer was that the testifying witness worked for a successor in interest to the

mortgage company that initiated the foreclosure proceedings. The witness had never

worked for the mortgage company which was the entity that had both drafted and

mailed the letters. Id. at 1190-91. And while the witness testified about the mortgage

company's policy and procedure for both drafting and mailing default letters, she had no

personal knowledge of those issues. Id. at 1191.

Similarly, in Soule, the testifying witness worked for the successor in

interest to the mortgage servicing company that had prepared and allegedly mailed the

default letter. Soule, 43 Fla. L. Weekly D1590. The witness testified she had never

worked for the original servicing company, and she admitted that she had never been

trained in any of the prior servicing company's procedures. Id. Thus we concluded that

the witness had no personal knowledge of whether the default letter was mailed or of

the prior servicing company's policies and procedures for mailing. Id.

Here, in contrast, not only did Mr. George work for Chase, the entity which

drafted the letter, but he also established his familiarity with Chase's routine practices

relating to the mailing of the default letters at the time the subject default letter was

mailed. We have previously held that "[t]he fact that a document is drafted is insufficient

in itself to establish that it was mailed" and that additional evidence is required to

establish proof of mailing. Allen v. Wilmington Tr., N.A., 216 So. 3d 685, 687-88 (Fla.

2d DCA 2017). However, such evidence may be in the form of proof of regular

business practices. See id. at 688. And we have concluded that such evidence "may

be sufficient to establish a rebuttable presumption of mailing," where the witness has

-9- "personal knowledge of the company's general practice in mailing letters." Id. (citing

CitiMortgage, Inc. v. Hoskinson, 200 So. 3d 191, 192 (Fla. 5th DCA 2016)).

While we acknowledge that Chase was not the entity that ultimately

mailed the letter, it had a routine practice for submitting default letters to a third-party

vendor which then mailed the letter. As Mr. George explained, Chase would then

receive proof of mailing back from the third-party vendor. We are persuaded by PNC

Bank National Association v. Roberts, 246 So. 3d 482 (Fla. 5th DCA 2018), that Mr.

George's testimony was sufficient then to create a rebuttable presumption of the mailing

of the letter.

Roberts contains many factual similarities to this case. There, a bank

employee testified about the routine business practices of the foreclosing bank which

included testimony about the creation of default letters. Id. at 485-86. Specifically, the

witness testified that the bank "creates the letter by ordering it from an outsourcing

vendor . . . which prints the [default] letters, folds them, places them in a window

envelope, seals the envelopes, affixes postage, and mails them by first-class mail." Id.

at 486. She also testified that the third-party vendor then provided the bank with a

report showing which letters were mailed. Id. The Fifth District Court of Appeal

acknowledged that the dates on the default letters only established the date that they

were drafted and not whether or when they were sent. Id. However, the court

ultimately held that the witness's "personal knowledge" of the bank's and the third-party

vendor's routine business practices and policies for default letters during the time period

when the pertinent default letters were mailed, in conjunction with the admission of the

default letters themselves, was sufficient to establish that the letters were mailed. Id.

- 10 - As in Roberts, the foreclosing bank here, Chase, was not the entity that

actually mailed the letter. Additionally, like the foreclosing bank in Roberts, Chase had

routine practices for drafting the default letters, submitting them to a third-party vendor

for mailing, and then receiving confirmation of mailing back from the vendor. The fact

that Mr. George was not employed by Chase at the time the subject default letter was

mailed is not dispositive because Mr. George was able to testify not only about his own

training and experience with Chase regarding default letters, but also about Chase's

policies and procedures relating to the mailing of default letters at the time the subject

default letter was mailed. Just as the Fifth District concluded in Roberts, we likewise

conclude that where a testifying witness establishes his or her personal knowledge of a

foreclosing entity's and third-party vendor's routine business practices and policies for

drafting and mailing a default letter, coupled with the admission of the default letter

itself, there is competent, substantial evidence that the subject default letter was mailed.

Id.

Because Nationstar sufficiently established that its predecessor in interest

(Chase) satisfied the condition precedent of providing the paragraph 22 notice, we

affirm.

Affirmed.

NORTHCUTT, J., Concurs. LUCAS, JJ., Concurs in result only.

- 11 -