TALLAHASSEE, Fla. (AP) — A homeowner's lawyer told the Florida Supreme Court on Thursday that the justices can strike a blow against rampant fraud by prohibiting lenders from simply voluntarily dismissing mortgage foreclosure cases to avoid penalties for filing bogus documents.
Such a ban would apply to all types of lawsuits, but a bank's lawyer said it's never been an issue until the state's mortgage foreclosure crisis.
"There has never been a matter of greater public importance in this court's obligation to deter fraud and defend its integrity," said Amanda Lundergan, who made her first Supreme Court oral argument on behalf of Palm Beach County resident Roman Pino.
Foreclosure cases have been rife with such practices as "robo-signing" by bank employees who often knew little or nothing about mortgage documents they were hired to sign. In Pino's case, the Bank of New York Mellon was accused of submitting a fraudulent assignment of mortgage.
Lundergan's argument got a bit chippy as the justices questioned her choice of words, legal positions and even her client's motive for pursuing an appeal.
The questioning was less intense for the bank's more seasoned attorney, Bruce Rogow, who's participated in 114 Supreme Court cases. He argued that existing court rules prevent judges from prohibiting plaintiffs from re-filing lawsuits that have been voluntarily dismissed.
"The court has no say in those situations," Rogow said. "There is nothing that can be done, and this has been established for years in Florida."
Rogow added that any changes in the rules should apply only to future cases rather than the thousands of foreclosure actions already filed.
He said there's no need, though, to revise the dismissal rule because there are other ways to penalize parties who commit frauds on the court. They include filing complaints with the Florida Bar against the lawyers involved and requiring offending parties to pay their opponents legal fees and court costs if a case is re-filed.
"We have to look at this in the universe of general civil litigation, and this has not been a problem," Rogow said.
The bank voluntarily dismissed its initial foreclosure filing against Pino after being accused of submitting a back-dated document. Rogow said the David J. Stern law firm that represented the bank was to blame for the document. That firm, which specialized in representing lenders, has since gone out of business.
A trial judge denied Pino's request to penalize the bank by prohibiting it from again filing the case, which it did five months later. The 4th District Court of Appeal in West Palm Beach affirmed that ruling but certified the issue to the Supreme Court as a question of great public importance.
Pino and the bank then settled, but in a 4-3 ruling the high court said the case was so important it would not let them drop it.
Lundergan also argued that no rules changes are needed but for a different reason than Rogow. She said the courts have the inherent authority to protect themselves against fraud and that applies to existing as well as future cases.
Ruling otherwise would encourage litigants "to lie, to cheat, to steal, knowing that if they are caught — if they are caught — they can simply voluntarily dismiss and absolve themselves of that fraud," she said.
Lundergan said the idea that judges lacked the authority to prevent cases from being re-filed is "nonsensical."
That drew a rebuke from Justice Barbara Pariente.
"When you use words like 'nonsensical,' I think you offend what we're trying to do here," Pariente said.
Chief Justice Charles Canady dissented from the decision to hear Pino's appeal.
"It seems like to me you're just looking for a 'gotcha' to get out of the mortgage," Canady told Lundergan. "Am I wrong?"
Lundergan denied that was their intent.
Pariente, who had voted to hear the case, noted the high court already has responded to foreclosure fraud by requiring sworn pleadings that give judges more authority to sanction lenders who make false allegations, but she said it failed to provide a mechanism for making those sanctions work.
She also called the fraud allegation in the Pino case "shocking" and acknowledged homeowners are at a disadvantage because many cannot afford lawyers.
"We have multi-million-dollar corporations up against single homeowners who don't have the resources many times to uncover this fraud," Lundergan said after the argument. "So it's our court's responsibility to protect those litigants."
The case is Roman Pino v. The Bank of New York, etc., et al., SC11-697