Florida Supreme Court Limits Discretion To Strike Voluntary Dismissals Of Foreclosure Actions

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The Florida Supreme Court recently held that when a borrower alleges fraud on the court as a basis for setting aside a lender’s notice of voluntary dismissal of a foreclosure action, the trial court has jurisdiction to sanction the lender by reinstating the dismissed action only when the fraud resulted in the lender securing affirmative relief to the detriment of the borrower before voluntarily dismissing the case to prevent the court from undoing the improperly obtained relief. Pino v. Bank of New York, No. SC11-697, 2013 WL 452109 (Fla. Feb. 7, 2013). In the trial court foreclosure proceeding, the defendant borrower had challenged the plaintiff lender’s assignment documents as fraudulent and moved for sanctions, after which the lender voluntarily dismissed the case without prejudice before a decision could be rendered on the motion. The trial court denied the borrower’s subsequent motion to vacate the notice of voluntary dismissal, reinstate the proceeding, and then dismiss it again with prejudice. The Florida Fourth District Appellate Court affirmed, but certified to the Florida Supreme Court the question of whether a trial court has jurisdiction or inherent authority to grant relief from a voluntary dismissal where the motion alleges a fraud on the court but the plaintiff has obtained no affirmative relief. The Florida Supreme Court then affirmed the Fourth District and held that the trial court did not have jurisdiction or inherent authority to reinstate the dismissed foreclosure action because the lender did not obtain affirmative relief before taking the voluntary dismissal, and as such, measures other than reinstatement existed to protect the borrower. Finally, in light of concerns regarding the abuses that can occur from the filing of fraudulent pleadings, the court requested the Civil Procedure Rules Committee to review those concerns and make recommendations for possible amendments to governing rules.

Topics:  Foreclosure, Fraud, Sanctions, Voluntary Dismissals

Published In: Civil Procedure Updates, General Business Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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