Florida court finds for bank in major foreclosure case
NEW YORK (Reuters) - Florida's highest court has ruled a homeowner cannot re-open a voluntarily dismissed foreclosure case despite allegations that the bank falsified documents, giving a win to banks in a closely watched ruling that could have affected thousands of cases in a state hit hard by the foreclosure crisis.
The Florida Supreme Court had been asked to decide whether banks accused of using fraudulent documents to file foreclosure lawsuits could dismiss the cases, and then later re-file them with different paperwork.
The case involves a foreclosure brought against homeowner Roman Pino in 2008 by Bank of New York Mellon Corp (BK.N), the trustee for the security that owned his loan. The mortgage was serviced by Bank of America (BAC.N).
Pino asked the court to dismiss the case, arguing that the documents filed by the bank and its attorneys had been fraudulently backdated. The case stems from the robo-signing scandal, in which banks and law firms allegedly signed off on foreclosure documents without verifying their accuracy.
The documents in Pino's case had been signed by an employee of the now-defunct David Stern law firm, one of the biggest foreclosure law firms in the country.
Before the court could rule, BNY Mellon voluntarily dismissed the case. The foreclosure was later re-filed, using different documents. Pino's lawyer asked the court to re-open the first case, saying the bank should not have been allowed to bring the same case when it committed fraud the first time around.
Before the case reached the Florida Supreme Court, Pino and BNY Mellon reached a confidential settlement. The high court decided to hear the case anyway to address what it said was a key policy question that has vexed courts across the state - whether or not voluntary dismissals can be reversed when there is an allegation of fraud.
On Thursday, the Florida Supreme Court decided that it could not, unless the plaintiff - in this case, the bank - had obtained some kind of affirmative relief, and the dismissal had kept the fraud from being remedied by the court.
However, the court acknowledged the "multiple abuses that can occur from fraudulent pleadings," and asked Florida's bar association to review civil litigation rules to determine if changes should be made to address the issue.
A lawyer for Pino, Amanda Lundergan of the Ice Firm, said she believed the ruling "will have the unintended effect of encouraging underhanded tactics" by plaintiffs in foreclosure and other cases.
A spokesman for BNY Mellon, Kevin Heine, declined to comment. Bank of America did not immediately return a request for comment Friday evening.
The case has been closely watched by banks and homeowners. An unfavorable ruling for the banks could have exposed them to severe financial liability in the state.
(Reporting by Jessica Dye; Editing by Gary Hill)
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