The Clerk of Court is Not the Best Bailee for Your Negotiable Instrument, Second DCA Holds

The Second District last week reversed a judgment of foreclosure, holding that Nationstar–the servicer of the loan at issue–could not establish it was the holder or nonholder in possession of a Note via possession by the clerk of court.

Years prior to the suit that led to the opinion in Partridge v. Nationstar Mortgage, LLC, 2D16-3081 (Fla. 2D DCA Aug. 11, 2017), lender Bank of America had filed the original note and mortgage with the trial court in a different foreclosure action.  That action was ultimately dismissed, but the original note and mortgage were left in the circuit court clerk’s possession.

Nationstar then began servicing the loan, and ultimately filed a foreclosure action of its own.  Nationstar did not take possession of the Note, but instead moved the trial court to take judicial notice of the originals and transfer them to the new action.  Ultimately, the trial court entered judgment of foreclosure for Nationstar, and the homeowner appealed.

On appeal, the Second District held that Nationstar had failed to establish standing because it did not show it possessed the original note.  The court rejected Nationstar’s contention that it “was using the clerk [of the court] as bailee to continue possessing the note on its behalf,” holding that Nationstar’s “unilateral decision to leave the original note and mortgage with the trial court does not establish possession of the note.”

This case demonstrates another of the many ways in which lenders and trial courts often misunderstand the issue of standing.  We at DPW Legal regularly handle appeals for homeowners who have found themselves with a foreclosure judgment against them.  If you find yourself in such a scenario, feel free to contact us so we can help you determine whether you might have a basis for appeal.