Oppenheim Law

Pino v. BNY Mellon case hinges on interpretation of procedural rules - Housing Wire

News   •   May 10, 2012 17:32 EDT

By Kerri Panchuk • May 10, 2012 • 5:32pm

The Florida Supreme Court mulled over the controversial Pino v. Bank of New York Mellon ($22.23 0.04%) case Thursday.

The justices' decision in the case will decide whether banks and other parties who commit some type of fraud on a court can terminate the issue by voluntarily dismissing the lawsuit or foreclosure. 

The complaint is a who's who of the Florida foreclosure crisis – with the key plaintiff being a man who claims a fraud was committed on his mortgage assignment and allegations that an employee of the now defunct David J. Stern law firm created fraudulent documents.

The Florida Supreme Court's holding will offer default attorneys and financial firms working in Florida a clearer picture on how the Florida Rules of Civil Procedure will be used when financial firms – or other plaintiffs – voluntarily dismiss a case when issues of fraud or document mishandling surface. 

This is a key issue since Pino's legal team alleges Bank of New York Mellon voluntarily dismissed a foreclosure when they discovered mortgage assignment issues prior to court proceedings.

The case was later re-filed, prompting Pino's legal team to address the mortgage assignment issues, claiming a court should have the opportunity to review the fraud issue. Pino's team argued at lower courts, and now the state Supreme Court, that a voluntary dismissal in the first case should not bar a court from holding an evidentiary hearing on issues of fraud.

Pino's attorney Amanda Lundergan of Ice Legal endured an intense grilling from the justices, honing in on the meaning of two Florida Rules of Civil Procedure – Rule 1.420(a) and rule 1.540(b). 

Essentially 1.420(a) states that accept when property has already been seized or is in custody, a claim may be "dismissed by plaintiff without order of court before trial" with a simple notice of dismissal.

On the other hand, Lundergan argues that rule 1.540(b) states a court "may relieve a party or a party's legal representative from a final judgment, decree or proceeding" when numerous issues arise, including fraud.

The justices challenged Lundergan on this point with one justice suggesting there first "has to be something to relieve the party of."  Justice Barbara Pariente suggested to Lundergan that the court already has relief mechanisms in place to cure parties of some of the injustices alleged including attorney sanctions and disciplinary proceedings at the state bar.

Justice Pariente questioned Lundergan's interpretation of the rules and suggested a decision changing the understanding of the rules would effect parties in many unrelated Florida cases.

"Most of the time when a defendant hears a party is dismissing a case, they are happy about that," Justice Pariente said. "They are happy they are relieving the lawsuit. It has to be someone who has obtained some relief. Here you would want us to interpret affirmative relief every time there is a fraud on the court, you want that to be enough to not allow the voluntarily dismissal."

She added, "You are really asking us to change the way the rule on voluntary dismissal operates."

Foreclosure defense attorney Roy Oppenheim, co-founder and senior partner of Oppenheim Law in Florida, is worried that the rules are being used as a tactical device for financial firms to cover up processing issues.

"I think they are focusing on what the state of the law has been up until now," Oppenheim said after hearing the justices questions. "They don't want to have a departure from a common practice that has existed (for a while), but what they don't realize is there is a practice of banks taking voluntary dismissals when there is a fraud and their hands can be caught in the cookie jar."

Oppenheim argues allowing too much deference to the bar and other enforcement mechanisms to handle fraud issues after voluntary dismissals undermines the court's authority.

"Knowing that these fraudulent or fake robo-signed documents are in court record makes it an issue," he said. "Now you have a tension between the course of conduct that has been occurring through the years and the court having the right to make sure the integrity of the judicial system is protected."

Oral arguments were held in the case Thursday. Attorneys do not expect a ruling from the Supreme Court for several weeks.