A creditor by any other name: Avant Capital, LLC v. Gomez

“A rose lender by any other a slightly different name would smell as sweet still be able to foreclose.”

Shakespeare 4th DCA (more or less)

Florida’s 4th District Court of Appeals has held that the omission of the word “corporation” from a corporation’s name as it appears on various mortgage loan documents, did not render the loan invalid as a matter of law.

The September 20, 2018 appellate decision, Avant Capital, LLC v. Gomez, 2018 WL 4519981, 254 So. 3d 1042 (Fla. 4th DCA 2018), was rendered following an appeal filed by a foreclosure plaintiff (creditor). The creditor was appealing a trial court’s order granting summary judgment in favor of the homeowner. The foreclosure plaintiff alleged that it was the holder of the note and mortgage that were in default, entitling it to foreclose. The plaintiff was not the original lender, having received an assignment of the loan from another party, as is common in the industry.

The issue here was that the the promissory note, the mortgage, and also the allonge that assigned the loan out from the initial lender, all omitted the word “corporation” from the initial lender’s name. The homeowner defended the foreclosure, claiming that this omission meant that the lender as shown on the documentation was a nonexistent entity and, thus, the promissory note and mortgage were void, and the endorsement from the (alleged to be) nonexistent entity was a nullity. The trial court agreed, granting summary judgment in favor of the homeowner.

The 4th DCA reversed the trial court’s ruling, and the DCA did not have to go far to find support for its reasoning. Florida Statutes § 694.12 states that all mortgages “made and received bona fide and upon good consideration […] in which the name of said corporation shall be incorrectly set out in such [mortgage] by omitting a word from the corporate name, or by adding a word thereto, or by misspelling any part of the name of said corporation, and the identify of said corporation shall plainly appear from the contents of said instrument, or otherwise, such [mortgage], shall be taken and deemed valid and effectual as though the name of said corporation were correctly set out in said [mortgage], and the same shall, notwithstanding such irregularity or defect, be deemed and taken as properly executed.”

Despite the unambiguous plain language of the statute, the 4th DCA also cited to a 1998 concurring opinion Presley v. Ponce Plaza Assocs., 723 So. 2d 328, 330 (Fla. 3d DCA 1998) (Cope, J., specially concurring) out of the 3rd DCA, which stated, “slight departures from the name used by the corporation, such as the omission of a part of its name or the inclusion of additional words, generally will not affect the validity of contracts or other business transactions as long as the identity of the corporation can be reasonably established from the evidence.”

Note that the practical result of this is not an automatic win for the plaintiff, meaning that the foreclosure will now proceed and the plaintiff will still have the burden of proof on its claims. Perhaps the homeowner has other defenses to the claims, perhaps not. However, the issue of whether or not the initial lender was a nonexistent entity has been determined.

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