The Florida Supreme Court issued a unanimous decision Thursday in a high-profile foreclosure fraud case, ruling that a trial court cannot reinstate a voluntarily dismissed civil action just because the plaintiff is alleged to have lied to the court.
Palm Beach County homeowner Roman Pino and the Bank of New York (BNY) Mellon were parties in a foreclosure suit going back to 2008. In 2009, Pino alleged that documents submitted to the court by BNY and its attorneys were fraudulently robo-signed. The bank voluntarily withdrew its suit, only to refile several months later, this time producing new documents.
Pino then asked the trial court to reopen the former case, claiming that BNY only moved for dismissal to hide its initial fraud. Pino hoped the court would then re-dismiss that initial case, but this time with prejudice, meaning BNY would be prevented from refiling.
The trial court, and later an appeals court, determined that it was unable to reopen a voluntarily dismissed case unless that dismissal resulted in some sort of harm to the defendant. Pinos attorneys insisted the trial court had an inherent power to protect [the courts'] integrity by reopening the case and sanctioning BNY.
Pino and BNY ended up settling in 2011, but the Supreme Court took up the case anyway, in order to consider the underlying legal question which the appeals court certified was of great public importance.
We hold that when a defendant alleges fraud on the court as a basis for seeking to set aside a plaintiffs voluntary dismissal, the trial court has jurisdiction to reinstate the dismissed action only when the fraud, if proven, resulted in the plaintiff securing affirmative relief to the detriment of the defendant and, upon obtaining that relief, voluntarily dismissing the case to prevent the trial court from remedying the effects of the fraudulent conduct, concluded Justice Barbara Pariente on behalf of the court, after an extensive analysis of existing law and precedent.
However, Pariente also wrote that there are other mechanisms in place to protect defendants like Pino from a plaintiffs abuse of the judicial process. First, BNY had lost the benefit of its one penalty-free voluntary dismissal; according to the state rules of civil procedure, once a suit is refiled it can only be voluntarily dismissed with prejudice. Second, upon the first voluntary dismissal Pino could have asked the court to grant him costs and attorneys fees. Finally, if Pino believed BNYs lawyers willfully engaged in fraudulent behavior, he could have reported them to The Florida Bar for discipline.
The courts ruling has implications for numerous other foreclosure actions across the state, in many of which defendants are alleging fraud by mortgage companies and are already in the midst of refiled lawsuits. Recognizing the concerns of those who discuss the multiple abuses that can occur from fraudulent pleadings being filed with the trial courts in this state, the court concluded its ruling by saying it would be taking a fresh look at the Florida Rules of Civil Procedure and would consider revising them to allow future defendants to seek the remedy Pino had been seeking.
Im disappointed that [the ruling] took away authority from the court that it should have, Enrique Nieves, who represented Pino before he settled with BNY, told Sunshine State News. I cant imagine a federal court dishing something like this out, basically saying that judges and court have less authority to police their own courtrooms.
Reach Eric Giunta at egiunta@sunshinestatenews.com or at (954) 235-9116.
