Yves calls it "a doozy."
I call it art. Some artists work in clay, some work in oils, Miami-Dade County Circuit Judge Jennifer Bailey works her magic in righteous indignation. Unlike the rest of us, Judge Bailey is empowered to act on her indignation.
By way of prologue HSBC Bank has previously been ordered by the court to post a bond to indemnify the defendant - whose house they have foreclosed on despite not having the mortgage note that establishes that the house is rightfully theirs. The deadline has passed without the bond being posted. The court is not amused.
HSBC Bank is represented by a Mr. William Huffman, the Florida Default Group by Ms. Suzanne Hill, and the (reserved and presumably gleeful) attorney for the defendant, Orlando Eslava is a Ms. Sheleen Kahn.
The curtain rises
THE COURT: And so then you know what you do? You file - if you have a problem with the court order and you get inconsistent directions from your client, you file a motion for extension of the time to file the bond, you come forth and say to the Court the case is in loss mit[igation] hold, can we postpone the filing of the bond? Can we give up the sale date so that I can give it to somebody else who really needs to sell ap piece of property on the courthouse steps? Instead of just ignoring a court order, because that's what happened here.Then the attorney for the defense realizes this is her moment.
MS HILL: I don't disagree that it could have been handled much better. I do agree to that.
THE COURT: I appreciate your diplomatic response, but is there any reason why the Court should not issue sanctions in this case? I mean, the court order was simply, based on what you're telling me, ignored because the client took the file in loss mit[igation] hold.
MS. HILL: Well, it was not complied with, that is correct, your Honor. And it was because it was on hold.
And Mr. Huffman honestly believed that if the case was still on hold, he had no objection to having the case dismissed.
As far as opposition at that hearing, Mr. Huffman believed he conveyed instructions to the local counsel that the case was on hold and there was no opposition.
I can't speak to what was said at that hearing --
THE COURT: Let me just be clear. I'm not going to sanction Mr. Huffman. Mr. Huffman, you know, he's just doing what the e-mails tell him to do. I know that.
At some level there is responsibility on the part of this court to make sure that notwithstanding whatever kind of sloppy operation the plaintiff is running, that court orders are complied with.
And Mr. Huffman, at the end of the day, this trust is going to be over and at the end of the day some day this foreclosure crisis is going to be over. And you need to decide what kind of lawyer you're going to be. Because at the end of the day you're responsible for your client's compliance with court orders.
And saying, oh, well, my client told me this, is not a defensible position because you swore an oath to follow the Rules of Civil Procedure and to follow the rule of law. And at the end of the day when they bury you, the words "HSBC Bank USA, NA as Trustee for Nomura Asset Acceptance Corporation, Mortgage Pass-through Certificates Series 2006--ARI will probably appear nowhere in your obituary.
So, you know, the bottom line - and I'm not giving you a lecture that I am not routinely delivering to foreclosure lawyers at this point in my career, which is, all lawyers have is your reputations. We don't make widgets, we don't buil[d] clocks, we don't build cars. We have nothing but the pleadings we file and sign our name to to evidence the quality and integrity of who we are.
And when you get a court order that says post a bond -- and you're being required to post a bond for a very logical reason. It's a trust. It's going to expire by its terms.
It's not the Bank of America. I don't know if it's going to be there in six years. And you've lost the note and you're required to indemnify the defendant and therefore you have to post a bond.
When that order is simply ignored and further motions for clarifications with the Court are not sought, you know, yes, do I understand completely that this is the client not knowing the left hand from the right had, yes; but at the end of the day, you're the lawyer, you're responsible.
MR. HUFFMAN: Yes, your Honor.
THE COURT: How many people currently work in your office?
MR. HUFFMAN: Attorneys or --
THE COURT: Attorneys.
MR. HUFFMAN: Fifty.
THE COURT: How many files are you currently responsible for?
MR. HUFFMAN: I don't have that number. I'm not sure.
THE COURT: How many cases can you tell me you know anything in detail about the loss mitigation status of the file?
MR. HUFFMAN: Well, the way it's set up, the bank handles the loss mitigation separately.
THE COURT: So the answer is zero. You're filing pleadings in court every day and you don't even know what's going on with the case.
And see, the really interesting thing to me as a judge is that in no other species or kind of law would that be remotely acceptable or, frankly, anything short of malpractice. But somehow in Foreclosure World everybody things that that's just fine, that you can know absolutely nothing about your files and walk in here and ask judges for things left and right without even knowing what's going on.
And, you know, ultimately, the law firms are going to start doing that at their [peril].
[........]
THE COURT: ...And I'm not trying to crucify Mr. Huffman just because he happens to be the guy that I hauled in here today, but the upshot of it is the bond was not posted. How much was the amount of the final judgment?
MS KHAN: Judge, if I may look in the file?
MS HILL: [$]207,238.72
THE COURT: Did the plaintiff acquire title [to Mr.Eslava's house] at [the foreclosure ] sale?
MS. HILL: Yes, your Honor.
THE COURT: What's the status of the property? Does anybody know?
MS. KAHN: Your Honor, Sheleen Khan for the defendant.
The defendant is paying on direct debit from his account every month. This will be his fifth payment under the HAMP program, your Honor.
THE COURT: Okay. I think as a sanction what would be appropriate is to direct HSBC, who failed to comply with the Court's order, the only -- there's nobody here from HSBC to offer any --
MS. HILL: Well, Mr. Huffman is here on behalf of HSBC today, as well.
THE COURT: But he doesn't know anything about the loss mitigation status. I just asked him.
MS. HILL: It's our understanding in this case that it is still under loss mitigation, it is being reviewed by HAMP for permanent modification.
THE COURT: Mr. Huffman, please rais your right hand.
(Thereupon, William Ward Huffman, III Esq. was duly sworn by the Court.)
THE COURT: What's your name?
MR. HUFFMAN: Bill Huffman.
THE COURT: What was the loss mitigation status on March 4, 2010?
MR. HUFFMAN: It was on hold for --
THE COURT: Tell me what was going on. How much had the defendant paid in? Had the defendant made any HAMP payments? Was the defendant formally enrolled in a HAMP program? Was the defendant in a HAMP trial period for HAMP?
MR. HUFFMAN: I knew the defendant was in a trial period for HAMP.
THE COURT: When was the defendant put into a trial period for HAMP?
MR. HUFFMAN: My file went on hold November 6 of 2009, so I knew they had been in the trial period since that time. I didn't know the exact date.
THE COURT: December what?
MR. HUFFMAN: It was November 6, I believe, 2009.
THE COURT: What was the date of the final judgment? December 9, 2009.
MR. HUFFMAN: The hearing was, I believe, November 5 and the judgment was signed December 9.
THE COURT: So you have a final judgment hearing on November 5 and the file went on hold November 6?
MR. HUFFMAN: Correct.
THE COURT: When was the file HAMP approved?
MR. HUFFMAN: It hasn't been fully approved at this time.
THE COURT: When was the file HAMP approved for trial modification?
MR. HUFFMAN: From my knowledge, it was November 6.
THE COURT: But I'm not asking you about your knowledge. Because you're here to testify on behalf of your client.
MR. HUFFMAN: Okay.
THE COURT: So on behalf of HSBC Bank USA, NA as Trustees for Nomura Asset Acceptance Corporation, Mortgage Pass-through Certificates Series 2006-ARI, when was Mr. Eslava's HAMP documentation accepted?
MR. HUFFMAN: I don't have -- I didn't see the doc to see when he actually signed the preliminary mods. I don't know the exact date. I just know that I was notified on November 6 to place my file on hold.
THE COURT: Mr. Huffman, respectfully, can't answer the questions I have because --
I'm going to sanction the bank. I'm not going to sanction Mr. Huffman. I could because I think Mr. Hoffman's conduct was contemptuous of a court order. But I'm also keenly aware that a comtempt finding from a judge has ramifications throughout the rest fo a laywer's career, and I'm really trying to avoid that.
What I'm trying to give is, for lawyers that handle these cases, a wake-up call to say this is your life, this is your career on the hook and you guys better wake up and smell the coffee.
But he cannot answer the questions for me to tell me the nature of the contempt.
Why wasn't a bond posted in this case pursuant to the court order?
MR. HUFFMAN: When I saw the order from March 4, I kind of read it --
THE COURT: Why wasn't the order -- the bond was ordered posted -- when did I order the bond? March 4. Okay.
Why wasn't a bond posted by April 4?
MR. HUFFMAN: When I saw the language, I thought it had two options, either post the bond by April 4 or have the case dismissed. Because our file was still on hold April 4, I just chose to allow the case to be dismissed.
Instead of posting the bond, I though that was an option I had. I thought it would be in the best interest of all parties. I didn't want to incur any more fees for the defendant in this case by moving the case forward.
THE COURT: Okay. Then as a sanction, the Court will follow the path chosen by Mr. Huffman. I will dismiss the case. I will dismiss the case with prejudice.
The note, which was canceled by this Court pursuant to a final judgment is null and void.
Mr. Eslava is relieved of the debt.
The title shall be conveyed back to Mr. Eslava by the bank -- by the trust -- as the legal liability for the note no longer exists.
The basis for this sanction is the contemptuous noncompliance with the Court's order to post the bond.
Should, however, any claim ever be pursued against Mr. Eslava on the note which was the subject of this case, since the note was lost, HSBC Bank USA, NA, as Trustee for Nomura Asset Acceptance Corporation, Mortage Pass-through Certificates Series 2006-ARI shall jointly and liablely (sic) with Florida Default Law Group, PL, and any successor law firm, be responsible to hold harmless and indemnify Mr. Eslava from any liability should the orginal appear in the context of another case.
MS. HILL: Your Honor, if I may just briefly respond?
I believe under the case law that in order to award sanctions, there has to be a finding of willfullness and bad faith on the part of Mr. Huffman.
THE COURT: No, this is on behalf of HSBC. I'm finding wilfulness because -- I'm not making Mr. Huffman responsible for the $207,238.72. I'm saying HSBC has been offered an opportunity to come and testify to this Court about why all this confusion erupted. They have given me Mr. Huffman. Mr. Huffman respectfully, can't answer very many of my questions in detail because all he knows is that the file was put on hold. It was put on hold the day after a final judgment was entered at the behest of the bank.
Now, I would like to know why the bank came in here one day to get a final judgment and the next day to put a file on hold. But that's really a sideshow. Really the big question is why didn't they comply with the order of March 9? Why did they simply ignore it.
And that answer is ["]we put the file on hold["]. That's a contemptuous answer. A bank does not have the authority or a trust does not have the authority to ignore a court order simploy because they are making business decisions on a file. And that's really where we are at.
MS. HILL: Respectfully, I understand, your Honor.
In this case, Florida Default Law Group is taking responsibility for its actions. And I would respectfully submit that canceling the underlying indebtedness woudl not seem to fit the failure of Florida Default in this case on behalf of the bank in complying with the order. Florida Default is more than willing to stand before you and apologize.
THE COURT: No. No. No. This is way beyond -- you know, look, I don't want apologies. I want performance. I want responsible attorneys who meet the basic standards of knowing what the Sam Hill is going on in their files.
I want acknowledgment that says, look, we understand that the court system is facing a massive number of foreclosures and we are not going to contribute to that burden by causing useless work by the Court.
Which is really what I just got told.
What I got told is, Judge, the guy was already approved for HAMP by November 6, so the hearing on November 5, you really didn't need to do that.
Because for every hearing that I do on these cases, the reason why I get this packet is I check service on every defendant, I look at the note, I make sure there's an endorsement. The fastest I can do one of these is about seven minutes. The slowest I can do it, if it's out of order, if it's disorganized, if there's things missing, which may well be the case in this case because the hearing was November 5 and the order wasn't entered until December, which means that there may have been missing items, it can take as much as 15 minutes or a half an hour. So the bank wasted my time on that.
They wasted my time -- and I don't care about my time because I'm paid the enormously high sum of $144,000 to be here every day.
But the second waste of time was then they come in and opposed the defendant's motion to cancel the sale. And we had a hearing and we talked about that. An I would imagine that took somewhere between 12 to 17 minutes, depending on how it went.
And then they come in and walk in a motion to cancel the sale.
That's three useless, completely idiotic events. And if Florida Default wants to make HSBC whole in this, then that's between them and their carrier.
But the bottom line is that's the sanction that the Court has ordered. Mortgage foreclosure is an quitable remedy. The plaintiff in this instance, whether it's through its own conduct -- because, frankly, I can't -- what Florida Default is telling me is we're just doing what they're telling us to do. They told us to put a file on hold.
If this is how a bank is going to conduct its business, then the bank should be bearing the sanctions. Florida Default can cut whatever deal it wants to cut with them, but at the end of the day, the bank is responsible for this.
Thank You.
MS. HILL: Thank you, your Honor.
THE COURT: I need the transcript ordered, please, and a simple order attached that adopts the transcript as my order, because I think that's going to be the cleanest way to do that. And I will direct that the transfer of title occur within 30 days.
MS. KAHN: Your Honor, if I may add, I have an affidavit in support of fees, attorneys fees, reasonable fees.To the surprise of no one, Ms. Kahn gets her money.
THE COURT: How much?
MS. KAHN: [$]1,222, your Honor. 6.11 hours.
Fade to black.
Fin.
