HSBC BANK USA NATIONAL ASSOCIATION AS TRUSTEE FOR DEUTSCHE ALT SECURITIES INC MORTGAGE LOAN TRUST SERIES 2005 v. SHERMAN (2020)

HSBC Bank USA challenges the trial court's final order dismissing its foreclosure action against Martin and Rhonda Sherman. We reverse and remand for further proceedings.

On December 28, 2004, the Shermans executed a note and mortgage with Pinnacle Financial Corporation. On January 5, 2010, the servicer of the note provided notice to the Shermans that they were in default and that it intended to accelerate payments due pursuant to paragraph 22 of the subject mortgage. The note and mortgage were subsequently assigned to HSBC on August 24, 2012. After the Shermans failed to bring the loan current, HSBC filed a foreclosure action, alleging that the Shermans were in default for failing to make the November 1, 2009, payment and all subsequent payments. That action, however, was “dismissed without prejudice to Plaintiff filing a new lawsuit.” HSBC then filed the instant foreclosure action on July 9, 2014.

As trial was about to commence, the Shermans made an oral motion to dismiss, arguing that the involuntary dismissal of the prior foreclosure action had been an adjudication on the merits and that, as such, HSBC was required to send a new paragraph 22 letter prior to filing the instant complaint. The trial court agreed and granted the motion to dismiss.

On appeal, HSBC argues that because the current action is based on the same default as the prior action—the failure to make the November 2009 payment and all subsequent payments—it was not required to send a new paragraph 22 letter.¹ We agree.

In PNC Bank, N.A. v. Otero, 277 So. 3d 199 (Fla. 3d DCA 2019), the court held that a dismissal without prejudice “does not constitute an adjudication on the merits” and that “following an involuntary dismissal without prejudice ‘there [is] no practical purpose in requiring an additional notice [of default].’ ” Id. at 200-01 (alterations in original) (quoting Sill v. JPMorgan Chase Bank, Nat'l Ass'n, 182 So. 3d 851, 852-53 (Fla. 4th DCA 2016)). Because the instant complaint alleged the same breach as the previous complaint, HSBC was not required to send a new notice under paragraph 22 of the mortgage. See id. at 201 (“[As the first complaint was] dismissed without prejudice, ․ [the original] notice of default remained valid and a second notice of default was not required before filing the second complaint based on the same default.” (alterations in original) (quoting Sill, 182 So. 3d at 852-53)). Accordingly, the trial court erred in dismissing the instant complaint for lack of notice, and we must reverse and remand for further proceedings.

Reversed and remanded.

FOOTNOTES

1.   The statute of limitations period for this claim had not expired when HSBC filed the instant complaint on July 9, 2014. See § 95.11(2)(c), Fla. Stat. (2009).

CASE, JAMES R., Associate Senior Judge.

LaROSE and SALARIO, JJ, Concur.