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IN THE DISTRICT COURT OF APPEAL OF FLORIDA THIRD DISTRICT

U.S. BANK, NATIONAL ASSOCIATION, etc.,

Appellant,

v. Case No. 3D11-891 Lower Case: 09-16102 ROSA PAIZ, et.al.,

Appellee.

APPELLEE’S MOTION FOR REHEARING EN BANC

COMES NOW, Rosa Paiz and Rigoberto Paiz, referred herein as

“Homeowner”, by and through the undersigned attorney, and

pursuant to Florida Rules of Appellate Procedure 9.330 and 9.331

(d), hereby moves this Court to grant rehearing en banc. The

undersigned counsel expresses a belief, based on a reasoned and

studied professional judgment, that the panel decision on

whether the trial court can stay the execution of a writ for

possession in a foreclosure case, in order to look further into

allegations of fraud on the court resulting from the pattern and

practice of the plaintiff in submitting of affidavits in support

of summary judgment signed by individuals whose claim of

personal knowledge is facially questionable, pursuant to

§702.07, and Florida Rule of Civil Procedure 1.540(b) is of

exceptional importance as it has a direct bearing on Florida

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judiciary’s struggle to fashion an effective remedy to deal with

the worsening foreclosure crisis affecting our state.

In support of this Motion, Appellee expressly relies on the

Appellant’s Appendices as filed with the Court and certain

matters of public records and public knowledge cited herein.

BACKGROUND FACTS

Appellee alleged fraud on the court in their Emergency

Motion under Fla. R. Civ. P. 1.540(b) to set aside judgment, and

re-open the case filed post foreclosure sale (A.15). The

challenges raised by Appellee below were whether the subject

loan has been included in securitized trust specified by

Plaintiff in the foreclosure suit, whether the affidavits of

amounts due and owing executed by notorious robo-signers China

Brown and Herman John Kennerty submitted in support of summary

judgment were at all reliable, and whether the affidavit of Lisa

Cullaro as to the reasonableness of the attorney fee added to

the judgment was executed in violation of the Florida Bar Rules

of Professional Conduct (A.14, A.17).

As a result of the allegations, the trial court held two

separate hearings to inquire further into these allegations.

Based on what it learned, the court issued two specific orders;

one staying the execution of a writ of possession based on final

judgment of foreclosure, and the other continuing the stay of

the writ and permitting discovery. In the order dated February

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18, 2011, Judge Joseph P. Farina cites to, in extending the

proceeding, Appellee’s motion alleging Fraud on the Court

(A.16).

US Bank filed an interlocutory order and on August 17,

2011, this Honorable Court reversed the trial court on the

ground that Florida Rule of Civil Procedure 1.540 “is designed

for the correction of clerical mistakes and to provide a

mechanism for relief from judgments, decrees, orders and

proceedings under certain articulated and limited circumstances.

It is not a substitute for a timely appeal.” ---So.3d --, 2011

WL 3586132 (Fla. App. 3 Dist., 2011). This motion for re-hearing

en banc timely follows.

ARGUMENT

Appellee respectfully submits that this Court has

inadvertently treated the proceeding below as one considered by

the circuit court pursuant to Florida Rule of Civil Procedure

1.540 (b), provisions (1) through (3), which have a one year

limitation while the record in fact reflects that the circuit

court became sufficiently concerned about fraud on the court to

rescind the sale temporarily so that additional discovery can be

held. In fact, Appellee relied upon the saving clause of Rule

1.540(b) which provides: “This rule does not limit the power of

a court to entertain an independent action to relieve a party

from a judgment, decree, order, or proceeding, or to set aside a

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judgment or decree for fraud on the court.” Id. It makes sense

that intrinsic fraud or fraudulent misconduct between the

parties has a higher standard a more strict time table because

“[I]f fraud on the court were to be given a broad interpretation

that encompassed fraudulent misconduct between the parties, a

judgment would always remain subject to challenge, and the one-

year time limitation applicable to motions based on [Civil Rule

60(b)(3)] would be meaningless.” 12 James Wm. Moore, et. al.,

Moore’s Federal Practice [4][c] (3d ed. 2010).

On the other hand, there is no time limit to move for

relief from judgment due to fraud on the court because any court

has the inherent power arising from the control necessary vested

in it to manage its own affairs and to achieve the orderly and

expeditious disposition of its business. Kokkonen v. Guardian

Life Insurance Co. of America, 511 U.S. 375, 377, 114 S.Ct.

1673, 128 L.Ed.2d 391 (1994).

Although the rule language refers to the court’s power to

“entertain an independent action”; it makes no sense for the

party sounding the alarm of fraud on the court to wait to file a

separate action when the court could very well address the

transgression as soon as it is made known in the same case.

Valerio v. Boise Cascade Corp., 645 F.2d 699, 700 (9th Cir.1981)

(district court “had jurisdiction over plaintiff's claims of

fraud on the court in the earlier settlement”).

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In the context of a foreclosure case where fraud on the

court has been alleged, it would be enormously unfair for the

homeowner to be denied relief from judgment, loses her house,

and then try to bring an independent lawsuit to address the

fraud committed in the foreclose case by opposing party or their

counsel. Fraud has long been recognized as an exception to

finality that justifies setting judgments aside. See Hazel-Atlas

Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 244-45, 64 S.Ct.

997, 88 L.Ed. 1250 (1944) (“From the beginning there has existed

alongside [rules of finality] a rule of equity to the effect

that under certain circumstances, one of which is after-

discovered fraud [upon the court], relief will be granted

against judgments regardless [of when they were entered].”),

overruled on other grounds by Standard Oil Co. v. United States,

429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976). Federal courts

have the inherent power to vacate judgments on proof of fraud.

Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375, 380, 114

S.Ct. 1673, 128 L.Ed.2d 391 (1994); Universal Oil Products Co.

v. Root Refining Co., 328 U.S. 575, 580, 66 S.Ct. 1176, 90 L.Ed.

1447 (1946) (“The inherent power of a federal court to

investigate whether a judgment was obtained by fraud is beyond

question.”); Southeastern Colorado Water Conservancy Dist. v.

Cache Creek Mining Trust, 854 P.2d 167, 176 (Colo.1993).

Additionally, the trial court has proper jurisdiction to

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rescind the sale and order discovery in this case under the

statutory authority of §702.07, Fla. Stat., which provides that:

“The circuit courts of this state, and the judges thereof at

chambers, shall have jurisdiction, power, and authority to

rescind, vacate, and set aside a decree of foreclosure of a

mortgage of property at any time before the sale thereof has

been actually made pursuant to the terms of such decree, and to

dismiss the foreclosure proceeding upon the payment of all court

costs.” This statute has been interpreted and applied by the

Florida Supreme Court to grant relief from judgment even post

foreclosure sale. Sterling Factors Corp. v. U.S. Bank Nat.

Ass’n, 968 So.2d 658 (Fla. 2d DCA 2007)(Statute granting circuit

court authority to rescind, vacate, or set aside a decree of

foreclosure of a mortgage of property at any time before sale

does not deprive a circuit court of jurisdiction to set aside or

reconsider a foreclosure judgment upon a proper motion once a

foreclosure sale has been held); see Taylor v. Day, 102 Fla.

1006, 136 So. 701 (1931); see also Maule Indus., Inc. v.

Seminole Rock & Sand Co., 91 So.2d 307 (Fla.1956)(The Florida

Supreme Court has concluded that section 702.07 does not deprive

a court of jurisdiction to set aside a foreclosure judgment once

a foreclosure sale occurs).

Of importance is Judge Altenbernd’s explanation of the

history of §702.07 and how it is so relevant to modern-day

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residential foreclosures and its application must be utilized to

level the playing field for embattled homeowners:

There is no discussion in the case law regarding the legislative history of this statute. It is noteworthy, however, that it was enacted before the modern rules of civil procedure and at a time when many Floridians were facing foreclosure and ruin due to the collapse of the Florida real estate boom. The collapse began in 1925 and 1926. See William W. Rogers, Fortune & Misfortune: The Paradoxical Twenties, in The New History of

Florida 294-96 (Michael Gannon ed., 1996). Thus, it seems likely that the statute was enacted during these hard times to give

trial judges more power to protect

landowners by expressly permitting the court

to take actions after the final judgment of

foreclosure and before the sale that were

not previously authorized. History, at

least, would not seem to support the

negative inference proposed by the Nesters,

which would provide more protection for the

banks and purchasers.

Sterling Factors, 968 So.2d at 663, n. 5, emphasis added.

The pattern and practice of banks in foreclosure litigation

has included the use of robo-signers to sign affidavits,

assignments, endorsements to promissory notes, and other

documents to facilitate summary judgment and foreclose sale of

homes in default. This pattern and practice has been on-going

and exposed, but not yet remedied. David Streitfeld, a reporter

of the New York Times wrote:

Chase and GMAC, in their zeal to process hundreds of thousands of foreclosures as quickly as possible and get those properties on the market, employed people who could

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sign documents so quickly they popularized a new term for them: “robo-signer.” In depositions taken by lawyers for embattled homeowners, the robo-signers said they or their team had signed 10,000 or more foreclosures affidavits a month. Now that haste has come back to haunt them, the affidavits in foreclosures attest that the preparer personally reviewed the files, which those workers acknowledge they have no time to do.

(Schott Vocab, Robos-signers, Nickname for those who processed

large numbers of foreclosure affidavits, October 6, 2010)

http://schott.blogs.nytimes.com/2010/10/06/robo-signers/.

As to the entity involved in the instant case, Wells Fargo,

Abigail Field of the Daily Finance wrote:

For example, in one case I reviewed, Herman John Kennerty of Wells Fargo gave a deposition describing the department he oversees for Wells Fargo. It’s a department

dedicated to simply signing documents. Kennerty testified that he signs 50 to 150 documents a day, verifying only the date on each. Although the foreclosure in that case was upheld, Wells Fargo did not dispute Kennerty’s signing practices.

What else might Kennerty want to verify? Well, in one document he signed that I’ve

reviewed, he supposedly transferred the mortgage from Washington Mutual Bank FA to Wells Fargo on July 12, 2010. But that’s

impossible because Washington Mutual Bank FA changed its name in 2004, and by any name WAMU ceased to exist in 2008, when the Federal Deposit Insurance Corp. took it over. . . Wells Fargo Flatly stands behind its practice.

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(Daily Finance, Robo-Signing: Documents Show Citi and Wells also

Committed Foreclosure Fraud, October 2, 2010)

http://www.dailyfinance.com/2010/10/02/robo-signing-scandal-

spreads-documents-show-citi-and-wells-also/).

Maryland homeowner asked a court to dismiss any Wells Fargo & Co. foreclosure actions in the state that involve affidavits given by a bank employee who said she signed documents without completely checking their accuracy.

Susan Saidman asked a Montgomery County court to recognize as a class all defendants in Maryland cases with foreclosure papers signed by Xee Moua for Wells Fargo. In a March deposition in a Florida case, Moua said she didn’t verify all the information in filings she signed, sometimes processing as many as 500 in two hours.

To permit “foreclosure actions to proceed

based upon these false and fraudulent papers would be to accept dishonest and bogus behavior in Maryland courts,” Saidman said in a motion filed Oct. 29. “Such a result

would be an assault on the rule of law.”

Saidman raised the defense against members of Shapiro & Burson LLP, a law firm that she said brings foreclosure actions on behalf of Wells Fargo and other secured lenders. The law firm couldn’t be reached by telephone

yesterday after regular business hours.

Wells Fargo, the biggest U.S. home lender, said last week that it will file supplemental foreclosure affidavits to courts in about 55,000 proceedings after finding some statements “did not strictly

adhere to the required procedures.” The San

Francisco-based bank has said it chose to resubmit the documents out of “an abundance

of caution” and that none of “these

instances led to foreclosures which should not have otherwise occurred.” Ohio Attorney

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General Richard Cordray last week asked

judges in his state for copies of

foreclosure affidavits filed in their courts

and signed by Moua. He sent a separate

letter to Wells Fargo asking the bank to

vacate any foreclosure judgment in Ohio

involving incorrect affidavits.

Marysville, Ohio, homeowner Ann Piwinksi brought a suit yesterday accusing Wells Fargo of violating the state’s Consumer

Sales Practices Act, according to court filings. Hers is the first civil case in the state against Wells Fargo involving the use of so-called robo-signers, according to her lawyer, John Sherrod of Dublin, Ohio.

Piwinski said documents in her foreclosure

case were signed by China Brown, Moua’s

supervisor. She’s seeking civil penalties

and punitive damages.

“Without seeing the specific information, it

would not be appropriate to provide a response on pending litigation,” Vickee

Adams, a Wells Fargo spokeswoman, said yesterday.

“We believe we have designed an appropriate

process intended to insure the quality of customer and loan data in foreclosure proceedings,” she said.

The Maryland case is Burson v. Saidman, 323096V, Circuit Court, Montgomery County (Rockville); the Ohio case is Piwinski v. Wells Fargo Bank, 2010-CV-1373, Fairfield County Court of Common Pleas (Lancaster).

http://www.bloomberg.com/news/2010-11-01/wells-fargo-foreclosure-robo-signer-draws-maryland-dismissal-motion.html

In the case sub judice, Appellee advised the circuit court

that said pattern and practice of using robo-signers is present

and that the affidavits submitted by Herman John Kennerty and

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China Brown, on behalf of Wells Fargo as the servicer of

Appellee’s loan are unreliable because these individuals have

been documented as lacking sufficient knowledge and information

to verify the accuracy of the contents of their affidavits and

other documents in aid of Wells Fargo’s foreclosures.

Herman John Kennerty himself submitted two affidavits of

amounts due and owing in this case. Kennerty swore in the

affidavit that he is a Vice President of Documentation for Wells

Fargo Bank, is familiar with the books of account and has

similarly “examined all books, records, and documents kept by

Wells Fargo Bank”, and has “personal knowledge of the facts

contained” in the affidavit as well as “personal knowledge of

facts regarding the sums of money which are due and owing to

Plaintiff or its assigns pursuant to the Note and Mortgage which

is the subject of the lawsuit.” (A.17, Attachment C).

To dispute these attestations by Kennerty, Appellee

provided the trial court with a copy of Herman John Kennerty’s

deposition in an unrelated case where Kennerty testified at

length about Wells Fargo’s system of generating documents

specifically to suit the foreclosures in all states. It becomes

crystal clear to the reader of Kennerty’s deposition that

signers like Herman John Kennerty, do not have personal

knowledge of anything they attest and affix their signatures to.

The signers of these documents do not examine any actual books

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of account or records of the loan in question. All they do is

sign the documents that have been generated for them:

Q. How many employees do you supervise?

A. 53 full-time employees. And we currently have 15 contract workers.

****

Q. How often do you actual sign documents?

A. Daily.

Q. Can you tell me about how many documents you sign a day?

A. Anywhere from 50 to 150

****

Q. Somebody comes and brings you those documents and you sit down to sign them. And you’re looking at the documents to make sure

that the date is correct and consistent with the date you’re signing the document;

correct?

A. Yes.

Q. And you’re looking on a computer screen

at the foreclosure matrix that you described to me to make certain that the name of the foreclosing-of the beneficiary on the document that you’re signing matches with

the matrix; is that correct?

A. No. That’s not correct.

Q. Okay. What are you looking at on the matrix?

A. I’m not looking at the matrix.

Q. Okay.

A. The matrix is updated daily, and this information is pulled from that matrix.

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Q. So you’re simply signing the document

that’s presented to you and you’re just

making sure that the date is correct.

A. Correct.

Q. So how do you know when you’re signing

this document that is true and correct?

A. There are people that are responsible for the – for maintaining that matrix.

Q. So you’re relying upon your employees to

have the correct information in the matrix system?

A. Not my employees.

Q. Okay.

A. Fellow Wells Fargo team members.

Q. Who puts the information into the matrix?

A. It’s generated from our foreclosure departments. Specifically I don’t know who.

*****

Q. And so when you sign this beneficiary declaration and any other beneficiary declaration, you don’t have any independent

knowledge about whether or not the information is truthful, you’re relying on

the other people in the process to make sure that the information is correct on the document that you’re signing?

A. Correct.

(A. 17, Attachment 3, Depo Transcript, pp. 8-9; 61-62, 63-64)

In addition to Herman John Kennerty, this case involves an

affidavit signed by China Brown as to amounts due and owed the

Plaintiff. China Brown, in her affidavit, swore to the

following:

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I am Vice President of Loan Documentation (title) of WELLS FARGO BANK, N.A. . . . I am familiar with the books of account and

have examined all books, records and

documents kept by WELLS FARGO BANK.

I have personal knowledge of the facts

contained in this affidavit. Specifically, I

have personal knowledge of the sums of money

which are due and owing to US Bank National

Association, as Trustee for SASCO 2007-WF2

pursuant to the Note and Mortgage which is

the subject matter of this lawsuit.

(A.17, Attachment A)

Because Appellee suffered a default judgment in this case,

the circuit court expressly relied upon the foregoing

attestations by China Brown, as well as other affidavits filed

by plaintiff counsel in support of summary judgment and granted

the same. Yet there is cause for concerns because China Brown

is also a robo-signer who swears to and signs different types of

documents in foreclosure cases for different banking

corporations. For example, in addition to being Vice President

of Loan Documentation for Wells Fargo, China Brown also signed

as VP of Loan Documentation for USB Mortgage LLC, in an

assignment of mortgage recorded in OR Book 23875, Page 0472,

Palm Beach County, on May 18, 2010. On that same day, China

Brown also signed as VP of Loan Documentation for Wells Fargo

Bank, N.A., in another assignment of mortgage recorded in OR

Book 23875, Page 0742, Palm Beach County, concerning another

property and mortgagors.

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These are simply matters of public records that this Court

could take judicial notice of. Citizens of State of Fla. v.

Florida Public Service Com'n, 440 So.2d 371 (Fla.1st DCA 1983)

(both agency and courts can judicially notice existing inflation

and its effect on a utility company); Mitchum v. State, 251

So.2d 298 (Fla. 1st DCA 1971) (Judicial notice is the cognizance

of certain facts which judges and the jurors may properly take

and act upon without proof because they already know them). The

fact that China Brown has signed for so many different

corporations and has sworn to so many matters so readily where

the matters require the average person’s utmost attention to

detail and careful examination of substantial amount of

information and data, is the point that the circuit court wanted

to investigate further and for good reason.

Again, Appellee brought to the lower court’s attention that

there were discrepancies between Kennerty’s affidavit and

Brown’s affidavit as to the per diem interest. The point of this

discussion, explained the Appellee in the motion hearing, is not

whether the discrepancies harm or help Appellee in the

calculations of the final judgment. Rather, it raises the

question of what other discrepancies or non-truths that these

affidavits represent and whether the court can confidently rely

on them to grant Plaintiff summary judgment.

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As to the affidavit of reasonableness of attorneys fee

submitted by Lisa Cullaro, Appellee challenged the propriety of

the affidavit in the proceeding below and asserted that Cullaro

violated the Florida Rules of Professional Conduct where Cullaro

declared that in her opinion, “a review of the actual file in

this case would be unnecessary and futile” and that “under no

circumstances could the fee be charged by FDLG, P.L., be

unreasonable.” The reliability of Lisa Cullaro’s affidavits too,

has been questioned in other foreclosure cases, and in one

particular case, defense counsel was interviewed by a news

reporter:

Ice detailed his questions in court documents filed in the 7th Judicial Circuit in Volusia County. Ice said [Erin] Cullaro worked as a lawyer with Florida Default Group before she worked for the attorney general's office. When she left the firm, she continued to serve as an expert witness for the firm, signing affidavits to establish that the firm's fees were reasonable. Her sister-in-law, Lisa Cullaro, notarized the affidavits, according to court documents. When Erin [Cullaro] started work for the attorney general's office, the

Cullaros changed roles: Lisa Cullaro served

as the expert witness, and Erin Cullaro

notarized the documents. Ice said both Lisa and Erin Cullaro's signatures varied in appearance, and he wants to question the two about it. The Cullaros, through lawyers, protested, but a Volusia County judge agreed in early April

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to allow Ice to ask the two limited questions. This has not yet happened. Ice thinks the questions may help his foreclosure lawsuit. In that case, Florida

Default Law Group is representing Wells

Fargo Bank.

(TBO.com, State AG Investigates Its Own, May 1, 2010), emphasis added. http://beta2.tbo.com/business/business/2010/may/01/bz-state-ag-investigates-its-own-ar-47218/

Not only does the Affidavit of Lisa Cullaro match this

pattern described by the news reporter in that she signed, and

her sister, Erin Cullaro, acted as notary (A.20, Attachment 5) ,

Appellee also referred to the case of Woodard v. Florida Bar,

SC03-1351, and attached a copy of the Consent Judgment for the

circuit court’s consideration where Woodard conceded essentially

the same conduct of signing and attesting to reasonableness of

fees without ever reviewing the actual file as a violation of

the Florida Bar Disciplinary Rule 4.8.4 (c) and (d). In fact,

Woodard stated in the consent judgment that he had signed

“thousands” of these affidavits:

Once it became apparent to the Respondent that the files involving uncontested matters were all essentially the same, Respondent began providing affidavits to Echavarria without reviewing the files before completing the affidavits in those cases that would be disposed of by Summary Judgment.

(A.20, pp. 22-26; A.7, Attachment 6)

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It is extremely difficult for the average person to

comprehend how widespread and persistent the problem of robo-

signing and faulty documentation is because despite a multitude

of publicity, said pattern and practice has yet to abate,

especially in Florida where we have been ravaged by residential

foreclosures. An article on the American Banker appears just

yesterday, August 31, 2011, reads in part:

Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners. The practice continues nearly a year after the companies were caught cutting corners in the robo-signing scandal and about six months after the industry began negotiating a settlement with state attorneys general investigating loan-servicing abuses. Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose. Some of documents reviewed by American

Banker included signatures by current bank employees claiming to represent lenders that no longer exist. Many banks are missing the original papers from when they securitized the mortgages, in some cases as long ago as 2005 and 2006, according to plaintiffs' lawyers. They and some industry members say the related mortgage assignments, showing transfers from one lender to another, should have been

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completed and filed with document custodians at the time of transfer. "It's one thing to not have the documents you're supposed to have even though you told investors and the SEC you had them," says Lynn E. Szymoniak, a plaintiff's lawyer in West Palm Beach, Fla. "But they're making up new documents." The banks argue that creating such documents is a routine business practice that simply "memorializes" actions that should have occurred years before. Some courts have endorsed that view, but others, such as the Massachusetts Supreme Judicial Court, have found that this amounts to a lack of sufficient evidence and renders foreclosures invalid. According to a document submitted in a Florida court by Bank of America Corp., bank assistant vice president Sandra Juarez signed a mortgage assignment on July 29 of this year that purported to transfer ownership of a mortgage from New Century Mortgage Corp. to a trustee, Deutsche Bank. Two problems with that: New Century, a subprime lender, went bankrupt in 2007; and the Deutsche Bank trust that purported to hold the loan was created for a securitization completed in 2006 — about five years before Juarez signed it over to the trust. (Bank of America, as the servicer of the loan, was seeking to foreclose on behalf of the trust and its bondholders.) Most of the pooling and servicing agreements governing securitizations require a complete chain of endorsements. This means the promissory note (the piece of paper the borrower signs promising to pay the loan) and all intervening mortgage assignments showing transfers from one lender to another must be delivered to a trust within 60 days of the securitization closing date.

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Jumana Bauwens, a spokeswoman for B of A, says such mortgage assignments are simply "procedural steps" to prove to a court that a trust has the right to foreclose on a borrower. In the Juarez case, B of A had power of attorney to sign on New Century's behalf, she says. But other mortgage industry members argue that the burden of proof is on the banks to show their legal right to enforce a debt, and that servicers are supposed to audit the loan before proceeding with a foreclosure. "They're supposed to make sure the trust is the correct trust, that the loan was properly assigned to the trust and that the debtor is genuinely in default," says Michael Olenick, the chief executive of Legalprise Inc., a West Palm Beach, Fla., research firm that tracks foreclosure filings and other court records for attorneys.

American Banker, Robo-Signing Redux: Servicers Still

Fabricating Foreclosure Documents, August 31, 2011. http://www.americanbanker.com/issues/176_170/robo-signing-foreclosure-mortgage-assignments-1041741-1.html

Clearly our judges too have taken notice of this outrageous

phenomenon and are trying to combat it. In Pino v. Bank of N.Y.

Mellon, 57 So.3d 950, 954 (Fla. 4th DCA 2011), Judge Polen

cautions the judiciary to address the widespread infection of

fraud upon the court via foreclosure proceedings, and wrote:

One federal appellate decision makes the point well. In Aoude v. Mobil Oil Corp., 892 F.2d 1115 (1st Cir.1989), the plaintiff filed a complaint based upon a bogus contract and attached that bogus document to its complaint. When the defendant became

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aware of the falsity of the contract sued upon, it moved to dismiss the case for the attempted fraud on court. The trial court granted the motion. When plaintiff later refiled its claim and attached the real contract, defendant again moved to dismiss, arguing that the dismissal of the first case barred the claim permanently. The trial court again granted the motion. The court of appeals affirmed both holdings. In an appeal plaintiff argued that the attempted fraud arising from the use of the bogus agreement had no effect ultimately on defendant's ability to litigate the case or on the court's ability to make a just decision on the merits. The court rejected the argument on appeal that the attempt to defraud the court had failed and thus could escape punishment, responding: “The failure of a party's corrupt plan does

not immunize the defrauder from the consequences of his misconduct. When [plaintiff] concocted the agreement, and thereafter when he and his counsel annexed it to the complaint, they plainly thought it material. That being so, ‘[t]hey are in no

position now to dispute its effectiveness.’ ” 892 F.2d at 1120. So, too, BNY Mellon's attempt to allege and file the assignment of the mortgage was undeniably based on a belief in the necessity for—and the materiality of—a valid assignment of mortgage. Defendant's colorable showing of possible fraud in the making and filing of the assignment led to the scheduling of the depositions of those involved in making the document and the notice of depositions led directly to the voluntary dismissal to avoid such scrutiny for an attempted fraud. As Aoude forcefully makes clear, a party should not escape responsibility and appropriate sanctions for unsuccessfully attempting to defraud a court by purposefully evading the issue through a

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voluntary dismissal. This issue is one of unusual prominence and

importance. Recently, the Supreme Court

promulgated changes to a rule of procedure

made necessary by the current wave of

mortgage foreclosure litigation. See In re

Amendments to Rules of Civil Procedure, 44 So.3d 555 (Fla.2010). In approving one amendment, the court pointedly explained: “[R]ule 1.110(b) is amended to require

verification of mortgage foreclosure complaints involving residential real property. The primary purposes of this amendment are (1) to provide incentive for the plaintiff to appropriately investigate and verify its ownership of the note or right to enforce the note and ensure that

the allegations in the complaint are

accurate; (2) to conserve judicial resources that are currently being wasted on inappropriately pleaded ‘lost note’ counts

and inconsistent allegations; (3) to prevent the wasting of judicial resources and harm to defendants resulting from suits brought by plaintiffs not entitled to enforce the note; and (4) to give trial courts greater authority to sanction plaintiffs who make

false allegations.” [e.s.] 44 So.3d at 556. I think this rule change adds significant authority for the court system to take appropriate action when there has been, as here, a colorable showing of false or fraudulent evidence. We read this rule change as an important refutation of BNY Mellon's lack of jurisdiction argument to avoid dealing with the issue founded on inapt procedural arcana. Decision-making in our courts depends on

genuine, reliable evidence. The system

cannot tolerate even an attempted use of

fraudulent documents and false evidence in

our courts. The judicial branch long ago

recognized its responsibility to deal with,

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and punish, the attempted use of false and

fraudulent evidence. When such an attempt

has been colorably raised by a party, courts

must be most vigilant to address the issue

and pursue it to a resolution. I would hold that the trial judge had the jurisdiction and authority to consider the motion under rule 1.540(b) on its merits *960 and—should the court find that a party filed a false and fraudulent document in support of its claim—to take appropriate action, including (without limitation) the striking of a voluntary dismissal filed in aid of such conduct.

Id at 959-960.

This Court statement in the opinion that the instant case

“is a prime example of allegations that nibble at the edges of

fraud” would be absolutely correct if Appellee were simply

trying to prove intrinsic fraud, i.e., specific instances of

fraud committed by US Bank on the Appellee within the

litigation. However, Appellee was alerting the circuit court to

a widespread and insidious pattern and practice employed by

banks in foreclosure cases without any regards for the rules of

law, and the circuit court was sufficiently concerned to do

something about it, including its decision to rescind the

foreclose sale temporarily to allow discovery.

Pattern and practice is commonly known as continuous and

repeated conduct rather than single isolated occurrence. Courts

have interpreted the term “pattern or practice' in accordance

with the usually meaning of the words. McLean v. GMAC Mortg.

24

Corp., 595 F.Supp. 2nd 1360, 1365 (S.D.Fla.2009), affd. 398 Fed.

Appx. 467 (11th Cir.2010); see also In re Maxwell, 281 B.R. 101,

123 (Bankr.D.Mass.2001) (citing Cortez v. Keystone Bank, Inc.,

No. 98–2457, 2000 WL 536666, *10 (E.D.Pa. May 2, 2000). (“The

term suggests a standard or routine way of operating .”); In re

Maxwell, 281 B.R. at 123; In re Tomasevic, 273 B.R. 682

(Bankr.M.D.Fla.2002) (failure to respond to one qualified

written request did not amount to a “pattern or practice”);

Ploog v. HomeSide Lending, Inc., 209 F.Supp. 2nd 863, 869

(N.D.Ill.2002)(failure to respond to qualified written requests

on five occasions was sufficient to establish a pattern or

practice”).

Here, where Appellee introduced evidence showing that the

system utilized by Wells Fargo in execution of documents

dispositive to the issue of summary judgment is flawed and where

all the affidavits submitted in this case are questionable

because their signers have engaged in robo-signing several

times, perhaps thousands, then a pattern and practice of fraud

on the court has been proven to warrant further discovery to see

whether this pattern and practice has infected the bench, then

the allegations voiced by Appellee are no longer nibbles but the

certain and destructive shredding at the fabric of our

judiciary. This is proof that the circuit court acted on its own

power and discretion to investigate further and whether Appellee

25

has suffered actual prejudice by the discrepancies and

irregularities is not a determining factor. Bi–Rite Package,

Inc. v. Dist. Court of the Ninth Judicial Dist., 735 P.2d 709,

(“[c]ourts are vested with very great and far-reaching power to

control their business and proceedings and to enforce their

orders and process in conducting the business of a court. Courts

must have these very great powers to ensure civility, orderly

procedure, respect for the court as an institution and for its

orders, and in the end an honest development of the facts of a

controversy that will end in a just result.

Extrinsic fraud has been defined as going to the

jurisdiction of the court, or constituting a fraud upon the law

of the forum, or which operates to deprive the person against

whom the judgment was rendered of an opportunity to defend the

action when he has a meritorious defense. It is such as prevents

the party complaining from making a full and fair defense.

Fahrenbruch v. People ex rel. Taber, 169 Colo. 70, 76, 453 P.2d

601, 605 (1969). Extrinsic fraud corrupts the judicial power and

serves to turn a court of law into an instrument of injustice. A

fraud upon the court is one which interferes with the judicial

machinery itself. Thus, fraud upon the court implicates

interests that transcend those of the parties, because it calls

into question the legitimacy of the court's judgment. See

Calderon v. Thompson, 523 U.S. 538, 557, 118 S.Ct. 1489, 140

26

L.Ed.2d 728 (1998).

In 1971, this Court reviewed the dismissal of an

independent action challenging a judgment secured by an

affidavit made by the adverse parties that was knowingly and

falsely made and which formed the basis of summary judgment,

reversed the trial court, and held plainly: “We find that the

complaint alleges the making of an affidavit by the adverse

parties which was knowingly and falsely made. The complaint

further alleges that the false affidavit was a basis for the

summary final judgment entered in the prior action. Kutner v.

Kalish, Fla.App.1965, 173 So.2d 763. We think that if these

charges are proved they are sufficient for relief authorized by

rule 1.540, Florida Rules of Civil Procedure.” If a fraudulent

affidavit that successfully secured a summary judgment can be

challenged in an independent lawsuit down the road, judicial

resources would be conserved by this Court’s approval of the

circuit court’s order of discovery to get to the bottom of

Appellee’s allegations of fraud on the court in this case right

now. Independent actions of homeowners who had been foreclosed

by robo-signed affidavits and manufactured documents because if

these were serving as a basis for a judgment, any judgment, are

likely because under this scenario, the judgment is not

voidable, but void ab initio. Sterling Factors, supra.

For the criticism that Appellee failed to address these

27

issues prior to summary judgment, the failure is relevant to the

consideration of a motion of vacate judgment pursuant to the

grounds enunciated in the subsections of the rule, but not under

the saving clause, or §702.07, Fla. Stat. Where banks install

this elaborate system of generating whichever documents required

in a particular foreclosure case, having people sign them and

attesting to their accuracy without any personal knowledge or

review, having the lawyers put the legitimacy on these

affidavits and filing them with the courts, who then rely on

them to grant summary judgment, the evil of fraud goes directly

to the heart of the summary judgment and changes the outcome of

the case. See Drobny v. Comm'r of Internal Revenue, 113 F.3d

670, 678 (7th Cir.1997)(alleged improper conduct must have an

effect on the outcome of the decision to challenge the rule of

finality); Coleman (Parent) Holdings, Inc. v. Morgan Stanley, 20

So.3d 952, 958-959 (Fla. 4th DCA 2009)(A motion for relief from

judgment is not the appropriate vehicle for handling attorney

misconduct in discovery that does not prejudice the final

judgment; rather, such misconduct is more appropriately

vindicated via criminal contempt proceedings and/or grievances

filed with the Florida Bar).

In particular, the pattern and conduct alerted by Appellee

is not fraud involving a single litigant or a single case but an

elaborate scheme involving score of lawyers as officers of the

28

court. Lockwood v. Bowles, 46 F.R.D. 625, 632–34

(D.D.C.1969)(“[W]here the court or its officers are not

involved, there is no fraud upon the court within the meaning of

[FRCP] Rule 60(b).”) Where the reliability of the subject

affidavits in support of summary judgment could/should have been

tried in the case prior to sale, the larger issue of creating

questionable affidavits and filing them in court to obtain

summary judgments in cases where the other party is

unrepresented affects the integrity of the bench; it is no

longer Appellee’s missed opportunity but a significant public

interest that demands this Court’s immediate attention.

In Hazel-Atlas Glass Co. v. Hartford-Empire, supra., the

United States Supreme Court granted relief from a judgment

obtained through an on-going fraud orchestrated by counsel as

fraud upon the court that began nine years earlier:

Every element of the fraud here disclosed demands the exercise of the historic power of equity to set aside fraudulently begotten judgments. This is not simply a case of a

judgment obtained with the aid of a witness

who, on the basis of after-discovered

evidence, is believed possibly to have been

guilty of perjury. Here, even if we consider

nothing but Hartford's sworn admissions, we

find a deliberately planned and carefully

executed scheme to defraud not only the

Patent Office but the Circuit Court of

Appeals. Proof of the scheme, and of its

complete success up to date, is conclusive. And no equities have intervened through transfer of the fraudulently procured patent or judgment to an innocent purchaser.

29

Hazel-Atlas Co. v. Hartford-Empire, 322 U.S. at 246, internal

citations omitted, emphasis added.

Appellee has argued that the circuit court properly

exercised its discretion to rescind the sale and ordered

discovery pertinent to the named affiants. A trial court's

ruling on a motion to vacate under Florida Rule of Civil

Procedure 1.540 is reviewed under the abuse of discretion

standard. Rosso v. Golden Surf Towers Condo. Ass'n, 711 So.2d

1298, 1300 (Fla. 4th DCA 1998); if there is factual dispute upon

which the trial court based its determination to vacate the

default final judgment, then the court of appeal would apply the

strict de novo standard. Mourning v. Ballast Nedam Constr. Inc.,

964 So.2d 889, 892 (Fla. 4th DCA 2007). The dispute here is

whether the circuit court proceeded under the intrinsic fraud or

extrinsic fraud and it appears from the record that the circuit

judge was sufficiently concerned as to the veracity of the

affidavits upon which summary judgment was granted in their

broader implication. As such, this Court should have found that

Judge Farina did not abuse discretion. Moreover, the circuit

court’s exercise of jurisdiction in rescinding the sale and

allowing discovery is entirely proper under §702.07, Fla. Stat.

Additionally, this Court in its written opinion, has

reached the merits of the controversy by commenting on the

30

substance and quality of the subject affidavits as to their

factual representations. The opinion stated that “Cullaro did

not state in her affidavit that she reviewed the fee affidavit”

and commented on the figures stated in the China Brown’s

affidavit as well as the Herman John Kennerty’s affidavits. The

circuit court’s order however is completely silent on the

substance of these affidavits but allows for discovery. “Sitting

as an appellate court, we are precluded from making factual

findings ourselves in the first instance.” Douglass v. Buford, 9

So.3d 636, 637 (Fla. 1st DCA 2009); Farneth v. State, 945 So.2d

614, 617 (Fla. 2d DCA 2006) (“A fundamental principle of

appellate procedure is that an appellate court is not empowered

to make findings of fact.”) Appellee prays that this Court

reconsider its prior decision and allow the circuit court’s

order to stand on this principle.

CONCLUSION

Appellee asserts that Appellant Bank has not come into

court with clean hands in its tender of the fraudulent documents

One of the principle maxims of equity is “he who comes into

equity must come with clean hands.” Bodley v. Jones, 59 A.2d

463, 469 (Del.1947). The purpose of the doctrine of unclean

hands is to maintain the integrity of the courts of equity and

shield them from misuse by litigants whose actions denigrate the

very principles of equity the courts are meant to uphold. See

31

Nakahara v. NS 1991 Am. Trust, 718 A.2d 518, 522 (Del.Ch.1998);

In re Enstar Corp., 593 A.2d 543, 552 (Del.Ch.1991); Skoglund v.

Ormand Industries, Inc., 372 A.2d 204, 213 (Del.Ch.1976). For

that reason, Appellee prays this Court to hear the matter en

banc, and affirm the circuit court.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the

foregoing has been furnished by U.S. mail to Attorneys for the

Appellant, Michael K. Winston, Esq., Dean A. Morande, Esq., and

Nancy C. Ciampa, Esq., Carlton Fields, P.A., 525 Okeechobee

Blvd, Ste 1200, West Palm Beach, FL 33401, this 1st day of

September, 2011.

CERTIFICATE OF FONT COMPLIANCE

I HEREBY CERTIFY that the size and style of type used in

this brief is 12-point Courier New, in compliance with Fla. R.

App. P. 9.210(a)(2).

Respectfully submitted,

________________________________ JANE M. LETWIN

FNB 990329

14251 SW 175th Street

Miami, FL 33177

COUNSEL FOR APPELLEE