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The Florida Bar Journal
September/October, 2014 Volume 88, No. 8
Deceleration: Restarting the Expired Statute of Limitations in Mortgage Foreclosures

by Andrew J. Bernhard

Page 30

The 2007 debt crisis spawned a wave of mortgage foreclosure filings that overwhelmed the Florida state court system. As Florida courts struggled to process the swelling foreclosure actions, so too did lenders and their foreclosure firms, leading to mass misfilings, the David J. Stern and Ben Ezra Katz law firm implosions, rocket dockets and mobbed for-want-of-prosecution calendars, and the robo-signing pandemic. In reaction, many lenders voluntarily dismissed up to thousands of foreclosure actions, thinking it better to collect their original loan documents and refile another day. Likewise, the courts involuntarily dismissed innumerable foreclosure actions to clear their overcrowded dockets. The statute of limitations on mortgage foreclosure is five years, and seven years have passed without refilings of these dismissed foreclosure actions.1 Are many of these mortgage foreclosures now time-barred?

Institutional lenders across the country are confronting this time-bar question. Lenders are asserting that the panacea is deceleration. Deceleration is the act of undoing a mortgage note’s acceleration and the accrual of the limitations period to return the lending arrangement to status quo ante — an installment agreement maturing in the distant future. Florida appellate courts have yet to flesh out mortgage deceleration.2 In anticipation of a surge in deceleration litigation in Florida, this article explains the concept of deceleration and its capacity to extend the foreclosure flood for years to come.

Accrual of Mortgage Foreclosure Actions and the Statute of Limitations
Mortgages in Florida are property liens securing the payment of debt, memorialized in a promissory note. Judicial foreclosure is the primary remedy available to recoup unpaid mortgage debt.3 Thus, at its simplest, a mortgage foreclosure is an action in breach of a promissory note, requesting judicial sale of property secured by the note through the mortgage. Modern notes and mortgages are most often installment contracts, whereby a new payment is due each month until the note and mortgage reach a maturity date.4 As such, the statute of limitations for an action on a written contract or foreclosure on a mortgage applies to enforcement of the note and mortgage. Florida law provides a five-year statute of limitations for both.5 The five-year limitations period for foreclosure begins when the foreclosure claim accrues against the borrower.6

Unlike causes of action that entirely accrue on a single date, separate claims accrue on a mortgage contract for each period in which the borrower fails to make a payment, creating a separate five-year limitations period for each unpaid installment.7 However, if the mortgage gives the lender an option to accelerate the entire debt balance after a defaulted payment, a single claim for the entire remaining balance can and does accrue when the lender exercises the contractual right to accelerate.8

Acceleration in lending parlance is the lender’s demand for immediate repayment of the entire loan balance. Acceleration transforms a loan from a long-term installment contract with a monthly payment plan to a loan whose entire remaining principal balance is immediately due. If the borrower does not immediately pay the entire principal balance of an accelerated mortgage loan, then the lender may foreclose upon the mortgage loan, recovering up to the entire loan value from proceeds of the judicial foreclosure sale. This acceleration process is of great convenience to the lender, given that many mortgages bear 30-year maturity dates. Through acceleration, the lender need not bear the cost and inefficiency of a suit upon every default through maturity, and the borrower need not spend the next 30 years under the threat, uncertainty, and cost of constant litigation.9

If a lender has the option to accelerate, it must make clear its intention to exercise this contractual right, usually by serving a notice letter to the borrower.10 Notice of intent to accelerate is almost always a contractual condition precedent to a foreclosure action on the entire mortgaged debt.11 If the lender neither sends written notice of intent to accelerate nor alleges acceleration in foreclosure pleadings, and there is no other external sign of acceleration, then a new cause of action should continue to accrue on each installment payment that the borrower misses.12 However, if the lender sends written notice of acceleration or alleges acceleration in foreclosure pleadings, then the note and mortgage evolve from an installment contract to a single-payment lump-sum debt, due immediately.

Further, if a lender takes affirmative action to accelerate the note and mortgage, then the application and accrual of the statute of limitations for recovering under the note and mortgage also evolve. Rather than accruing with each defaulted installment, one unified limitations period accrues immediately on all of the installment payments, i.e., triggering the limitations period for the entire principal balance through maturity.13 Thus, if the mortgage gives the lender an option to accelerate the entire debt balance after a defaulted payment, a single claim for the entire remaining balance can and does accrue when the lender exercises the contractual right to accelerate.14 It is of some debate in Florida whether the acceleration of the note and mortgage debt and the accrual of the statute of limitations may thereafter be undone by reinstatement of the original installment terms or dismissal of the foreclosure complaint alleging acceleration.15 Whether there can be a deceleration of the accelerated note and mortgage to restart the clock remains unanswered by Florida state courts.

Deceleration is the post-acceleration process of returning the contractual lending arrangement between lender and borrower to status quo ante — an installment contract under which the statute of limitations for the entire loan debt has not been triggered. Although most mortgage contracts delineate the prerequisites of acceleration, they neither address the right nor the procedure of deceleration, leaving much to postulation, conjecture, or judicial determination. Compounding the uncertainty, lenders rarely, if ever, proactively decelerate through a written notice of intent to the borrower. Instead, lenders retroactively assert deceleration in the lender’s second foreclosure action or the borrower’s action to quiet title. These lender assertions respond to the borrower’s allegation that the five-year statute of limitations precludes enforcement of the note and mortgage. In these instances, the lender must argue that the accelerated mortgage effectively decelerated through either the involuntary dismissal or voluntary dismissal of its initial foreclosure complaint.16

Deceleration and Involuntary Dismissal
Beginning with Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004), courts have been pouring the foundation of deceleration in Florida. In Singleton, the Florida Supreme Court held that an involuntary dismissal with prejudice of a mortgage foreclosure action did not preclude by res judicata a later foreclosure action based on a subsequent default involving the same note and mortgage. The court held against res judicata preclusion because the dismissal with prejudice only had the effect of adjudication on the merits as to the first date of default, leaving the lender free to assert foreclosure and acceleration as to the subsequent default. The court stated:

[A borrower] may prevail in a foreclosure action by demonstrating that she [or he] was not in default on the payments alleged to be in default, or that the [lender] had waived reliance on the defaults. In those instances, the [lender and borrower] are simply placed back in the same contractual relationship with the same continuing obligations. Hence, an adjudication denying acceleration and foreclosure under those circumstances should not bar a subsequent action a year later if the [borrower] ignores [his or] her obligations on the mortgage and a valid default can be proven. . . . This seeming variance from the traditional law of res judicata rests upon a recognition of the unique nature of the mortgage obligation and the continuing obligations of the parties in that relationship. . . . If res judicata prevented a [lender] from acting on a subsequent default even after an earlier claimed default could not be established, the [borrower] would have no incentive to make future timely payments on the note….17

The court reasoned that “clearly, justice would not be served if the [lender] was barred from challenging the subsequent default payment solely because he [or she] failed to prove the earlier alleged default.”18 The court held that a later valid default provided a new and independent right to accelerate the note for a later foreclosure action, which was not precluded by the prior adjudication.19

Although the court did not use the term “deceleration” in the mortgage foreclosure context, the court did state that the earlier adjudication was a denial of the earlier acceleration, and the parties were thereby “simply placed back in the same contractual relationship with the same continuing obligations.”20 This statement invokes the core of the deceleration concept: the act of undoing a mortgage and note’s acceleration to return the lending arrangement to status quo ante. Without stating it explicitly, the Supreme Court in Singleton had opened the door to deceleration in Florida.

However, the Supreme Court omitted explanation of 1) what constitutes a valid new default after the initial round of default, acceleration, foreclosure filing, and dismissal; 2) how the fact-finder below determines that a valid new default has occurred; and 3) what conditions constitute valid new default, including whether the lender must reinstate the original note and mortgage terms in the interim or serve a second notice of intent to accelerate. Moreover, the court in no way addressed the effect of the involuntary dismissal on the statute of limitations.

Nevertheless, lenders have since argued for application of Singleton outside of the res judicata context to evade the statute of limitations time-bar. These lenders assert that they can refile a second foreclosure after any dismissal by simply alleging any new default date within the limitations period without analysis of whether 1) a valid new default in fact occurred; 2) contractual accelerations or decelerations in fact occurred, and if so, how many and by what method; or 3) the prior foreclosure action was dismissed voluntarily or involuntarily.21

Dorta v. Wilmington Trust National Ass’n, 2014 WL 1152917, slip op. at *5 (M.D. Fla. 2014), exemplified this broad-scope application of Singleton outside the ambit of res judicata. In Dorta, the Middle District of Florida held that a single involuntary dismissal without prejudice for lack of prosecution in a mortgage foreclosure action did not bar a later foreclosure action on the same note and mortgage. The Dorta court came to this conclusion even though the five-year limitations period had expired since the first foreclosure filing. There was no court adjudication rejecting acceleration, and the record showed no affirmative act by the lender or borrower to decelerate the contract between them.22 According to the Dorta court, the involuntary dismissal for lack of prosecution ipso facto decelerated the note and mortgage thereby disengaging the expired statute of limitations.23

To justify its holding, the Dorta court both relied heavily on Singleton and greatly expanded its holding, expressly stating:

To be sure, Singleton limits its discussion to the application of the doctrine of res judicata — however, the analysis applies with equal effect to the arguments before this [c]ourt. [The borrower] contends that [the lender]’s unsuccessful attempt to foreclose on the [n]ote and the [m]ortgage based on a [2007] default forever barred [the lender] from bringing any further foreclosure proceedings because the statute of limitations had run. Singleton directly refutes this argument, holding that even where a [lender] initiates a foreclosure action and invokes its right of acceleration, if the [lender]’s foreclosure action is unsuccessful for whatever reason, the [lender] still has the right to file later foreclosure actions — and to seek acceleration of the entire debt — so long as they are based on separate defaults.24

However, the Singleton court did not hold that an unsuccessful mortgage foreclosure, for whatever reason, decelerates a note and mortgage, and did not address the statute of limitations.

Such reliance upon noncontextual language from Singleton without case-by-case factual investigation and legal analysis has expanded Singleton beyond its reasonable scope. Appropriate application should require a determination whether a valid or factually new default occurred, whether accelerations or decelerations factually occurred, and whether the prior foreclosure action was dismissed voluntarily or involuntarily. As discussed later in this article, courts in other states have focused on the evidence of a valid deceleration and new default. These courts have specifically required further external acts by a lender to decelerate a note and mortgage and evade the statute of limitations time-bar.

Deceleration and Voluntary Dismissal
No Florida decision has directly addressed the question of whether the voluntary dismissal of a foreclosure action reverses an acceleration and unwinds an expired limitations period if measured from the filing date of the initial foreclosure action. However, there are shades of the deceleration principle in Olympia Mortg. Corp. v. Pugh, 774 So. 2d 863 (Fla. 4th DCA 2000), and Kaan v. Wells Fargo Bank, N.A., 2013 WL 5944074 at *2 (S.D. Fla. 2013).

The appellate court in Pugh addressed whether two prior voluntary dismissals precluded a third foreclosure action, as the second dismissal would have operated as an adjudication on the merits under Florida’s two-dismissal rule.25 The appellate court expressed that “[b]y voluntarily dismissing the [first] suit, Olympia [the foreclosing plaintiff] in effect decided not to accelerate payment on the note and mortgage at that time.”26 This statement invokes the core concept of deceleration: the undoing of a mortgage and note’s acceleration to return the lending arrangement to status quo ante.

After the lender in Pugh had voluntarily dismissed its first two foreclosure actions, but before filing the third, the lender applied escrow funds toward a defaulted payment from three years earlier. The lender attempted to thereby create a factually new default. The trial court held that this did not create a new claim and held the third foreclosure action was barred by res judicata. The Fourth DCA reversed, holding that the first voluntary dismissal “in effect” was a decision not to accelerate, supporting a conclusion that the entire balance of the note was neither at issue nor adjudicated by the voluntary dismissal of the second action.27

However, it appears that the lender in Pugh did not make a separate notice of intent to accelerate, only a demand in its complaint. This lack of a separate notice of intent to accelerate in Pugh is important because without an acceleration notice independent of the foreclosure complaint, a voluntary dismissal alone could effectively unwind the only evidence of acceleration — the statement of acceleration in the foreclosure complaint. The result might have been different if the lender had made an independent statement of intent to accelerate prior to filing its foreclosure action because a return to status quo ante through voluntary dismissal would not have eliminated the independent statement of intent to accelerate. The borrower or the court could have pointed to the remaining notice and argued that it was unaffected evidence of acceleration and the accrual and expiration of the statute of limitations, in which case, the voluntary dismissal would not have undone the acceleration.

In the end, the crux of the Pugh holding was insufficient identity between the first two actions because of the differences in default dates rather than deceleration.28 In other words, the facts necessary to the maintenance of the first suit were not the same as in the second suit, and the judgment sought in each suit did not require the same proof to justify them.29 Nevertheless, the Pugh court’s statement that the first voluntary dismissal represented a decision not to accelerate is not mere dictum because the appellate court could not have reached the conclusion that there was insufficient identity between the first two actions if the initial acceleration demand had not decelerated before the second action. As such, this decision is helpful, although not ultimately dispositive on the limitations issue.

More recently in Kaan, the Southern District of Florida addressed whether the statute of limitations barred enforcement of a note and mortgage when the lender had accelerated through an initial foreclosure complaint, voluntarily dismissed, and failed to refile within five years of the initial filing. The Kaan court held that the note and mortgage were still enforceable.30

The borrower, Kaan, had filed an action to quiet title and release the note and mortgage encumbering his property after five years had elapsed from the initial foreclosure filing. Prior to the quiet title action, the borrower had defaulted in July 2007 on a note with an October 2046 maturity date. The lender had filed a foreclosure action in February 2008 alleging that the entire principal balance was then due (an allegation of acceleration). In September 2011, the lender voluntarily dismissed without prejudice, and, in 2013, the borrower filed his action to quiet title, alleging that the five-year statute of limitations barred enforcement of the note or mortgage.31 The trial court rejected the borrower’s assertion, holding that the lender could file a second foreclosure action based on the default of any payment owed within five years — a decision that tacitly required deceleration of the note and mortgage after the lender’s February 2008 foreclosure filing.32

The Kaan court did not directly address whether the lender had given separate notice of intent to accelerate, whether the lender had properly pled or effected acceleration in its 2008 foreclosure complaint, or any decelerating effect of the lender’s voluntary dismissal. Instead, the Kaan court relied on a broad interpretation of Singleton and its progeny, finding that “Singleton held that a first foreclosure action did not bar a second foreclosure action.”33 This interpretation, together with the obligation to construe the facts alleged in the light most favorable to the lender and the possibility of other breaches of the mortgage contract, supported the trial court’s holding that the note and mortgage were still enforceable, requiring dismissal of the borrower’s quiet title action without prejudice to refile as to subsequent defaults.34

Lenders may be tempted to misuse the broad language in Kaan to support an argument that an unsuccessful mortgage foreclosure, for whatever reason, decelerates a note and mortgage. This may be so even though the Singleton court limited its discussion to the res judicata effect of a first foreclosure action. In fact, the current Florida trend is toward reliance upon noncontextual language from Singleton without an in-depth, case-by-case analysis regarding whether a valid or factually new default occurred, whether accelerations or decelerations occurred, or whether the prior foreclosure action was dismissed voluntarily or involuntarily. This trend may expand Singleton beyond its reasonable scope. Courts in other states have not embraced this approach, but rather have focused on whether a valid new default occurred on an evidentiary level and the external acts a lender must perform to truly decelerate a note and mortgage to unwind the statute of limitations.35

Other State Courts on Deceleration of an Accelerated Mortgage Note
The following nonexhaustive review illustrates that courts in other states disagree on the effect of a voluntary dismissal on acceleration and the effect of a voluntary dismissal on allegations of acceleration in a foreclosure complaint.

In U.S. Bank National Ass’n v. Gullotta, 120 Ohio St. 3d 399 (2008), the Supreme Court of Ohio distinguished a factually new and valid default from one strategically pled to evade legal preclusion. In Gullotta, a lender attempted to avoid a “two-dismissal” res judicata bar with a third foreclosure complaint that alleged acceleration on a date after its second voluntary dismissal, arguing that the third action was different because it sought payments running from the month after its second dismissal.36 The Supreme Court of Ohio held that the two-dismissal rule would not bar a third claim if it were factually different from the dismissed claim, but concluded that simply altering the pleadings without a valid and distinct default in fact would not suffice:

[I]n an attempt to get around having its claim barred by res judicata, [the lender] amended its third complaint to include a prayer for interest from [a date after its second dismissal]. That amendment was merely a change to the complaint, not a change in the common nucleus of operative facts supporting the claim. . . . Although [the lender’s] complaint changed, the operative facts remained the same. Plaintiffs cannot save their claims from the two-dismissal rule simply by changing the relief sought in their complaint. Allowing [the lender] to do so would be like allowing a plaintiff in a personal-injury case to save his [or her] claim from the two-dismissal rule by amending his [or her] complaint to forgo a couple of months of lost wages.37

The Supreme Court of Kentucky reached a similar result in Hamlin v. Peckler, 2005 WL 3500784 (Ky. 2005), stating:

[N]o Kentucky case appears to squarely address whether there can be subsequent defaults after suit is brought on an accelerated debt. However, the answer would appear to be “no” as one of the principal purposes of pleadings is to develop the precise point in dispute by formulating the true issues. Thus, when the [lender] sought recovery of the entire unpaid indebtedness and sought to subject the real property upon which the mortgage lien had been granted to payment of the indebtedness, a default was asserted with respect to every installment of the debt, foreclosing assertion of some subsequent claim of default.38

The Supreme Court of Nevada has weighed in as well. In Cadle Co. II, Inc. v. Fountain, 281 P.3d 1158 (Nev. 2009), the Supreme Court of Nevada held that a lender that failed to accompany its voluntary dismissal with a clear, unequivocal, and written memorialization of intent to withdraw an acceleration notice failed to reverse or decelerate its prior acceleration of the note.39 The Fountain court spurned the lender’s assertion that its voluntary dismissal nullified acceleration under Nevada’s voluntary dismissal rule, holding the lender’s later foreclosure action as time-barred.40 These decisions expressly contradict Pugh as to the effect of a voluntary dismissal on an allegation of acceleration, providing ammunition to Florida borrowers combating enforcement of potentially time-barred notes and mortgages.

Other courts have focused on the evidentiary effect of acceleration allegations in voluntarily dismissed foreclosure complaints, which may survive the dismissal. For example, the U.S. Court of Appeals for the Eighth Circuit applied Missouri law in First Bank of Marietta v. Hogge, 161 F.3d 506 (8th Cir. 1998), to hold that a lender’s allegation of acceleration in a voluntarily dismissed foreclosure complaint was admissible in a later suit as evidence that the lender had previously accelerated the note.41 The lender in Hogge had filed an initial complaint under a lease-purchase agreement, alleging that it had accelerated all payments following a default on the agreement.42 The lender voluntarily dismissed that suit, filed anew, and alleged that it had never accelerated the note, supporting its contention with affidavits from its president and vice president stating that no acceleration had occurred.43 The district court disagreed, holding that the lender had, in fact, accelerated all payments, and the Eighth Circuit affirmed. The appellate court found the lender’s later denials of acceleration wholly inconsistent with its earlier allegations of acceleration in the dismissed action and held that no reasonable juror could find that the lender did not accelerate. The Eighth Circuit’s holding implies that a voluntary dismissal alone does not decelerate a note and mortgage.

Notwithstanding these decisions interpreting Ohio, Nevada, and Missouri law, at least two California courts have leaned in the other direction — albeit long ago. In the 1920 decision of Keeler v. Baird, 191 P. 563 (Cal. Ct. App. 1920), a California appeals court held that dismissal of a lender’s action alleging acceleration amounts to withdrawal and waiver of that acceleration, although the Keeler court made this statement in dictum.44 Twenty years before Keeler, the Supreme Court of California had acknowledged in California Savings & Loan Soc. v. Culver, 59 P. 292 (Cal. 1899), that a dismissal by stipulation could effect a waiver of acceleration, stopping accrual of the statute of limitations.45 Further, the Supreme Court of Arkansas held in Mitchell v. Fed. Land Bank of St. Louis, 174 S.W.2d 671 (Ark. 1943), that a lender could waive acceleration by unilateral action.46 The Mitchell court resolved that deceleration could be accomplished through a voluntary dismissal expressly stating that there was an agreement between the lender and borrower, or by sending a letter of deceleration to the borrower. However, the Mitchell court did not find that a voluntary dismissal alone could effect a deceleration. 47

These decisions supplement Florida law on deceleration, providing arguments both for borrowers and lenders. Hamlin stands squarely against lender assertion of a post-acceleration default, while Gullotta at least stands against strategic pleading to avoid the statute of limitations, requiring a distinct factual default to create a new controversy. By extension, a distinct factual default after acceleration may require a distinct factual deceleration and reinstatement of the installment contract, evidenced by external signs from the lender. Such distinct and evident deceleration appears to be required under Fountain. Without such a distinct and evident deceleration, a lender should be subject to the evidentiary weight of its acceleration allegations in prior foreclosure complaints, as detailed in Hogge. Notwithstanding, Culver and Keeler, and even Mitchell, may require no more than the voluntary dismissal itself.

Arguing Pugh and Singleton to Determine the Statute of Limitations Question
Proactive borrowers are filing actions to remove the Damocles swords hanging over their homes, requesting quiet title to release unpaid and potentially unenforceable mortgages and notes. Lenders are simultaneously gearing up to refile the foreclosure actions that were dismissed in the peak of the recession, despite having initially filed many of these actions over five years ago. Going forward, lenders must find a way around the five-year statute of limitations. Deceleration should play a crucial role. To properly invoke deceleration and thereby extend, restart, or unwind the statute of limitations, lenders should argue for an extension of Singleton to encompass a voluntarily dismissed foreclosure action, or rely on Pugh to argue that the lender decelerated by voluntary dismissal. Borrowers, in turn, should argue against the broad-brush application of Singleton and Pugh, and instead request a more detailed, case-by-case factual analysis of lender acceleration and deceleration with the scrutiny employed in Ohio, Nevada, and Missouri.

Lenders may continue to argue that the holding in Singleton should be expanded to encompass any unsuccessful foreclosure action, even though Singleton solely addressed the res judicata effect of an involuntary dismissal. Under this expansive application, courts would hold that mortgages automatically decelerate upon the voluntary or involuntary dismissal of a mortgage foreclosure action. As in Singleton, justice may not be served if a lender were barred from collecting on an entire note through maturity merely because the lender did not or could not complete its prior foreclosure action. This broad-scope argument has gained traction, as seen in Dorta and Kaan. However, as borrowers are sure to argue, this extension of Singleton may ignore the purpose of the statute of limitations, which includes encouraging the alienability of real property, protecting the unexpected enforcement of stale claims brought by plaintiffs who have slept on their rights, and ensuring fairness by not allowing enforcement of unfresh claims against parties who are left to shield themselves from liability “with nothing more than tattered or faded memories, misplaced or discarded records, and missing or deceased witnesses.”48 Justice may not be served by extending the filing deadline on these belated foreclosure actions up to the statute of repose, mortgage maturity, or indefinitely.

In the alternative, lenders can rely on the Pugh court’s analysis that a voluntary dismissal in effect returns the lender-borrower relationship to status quo ante. This may be very effective if the only evidence of acceleration lies in the allegations contained in the voluntarily dismissed complaint, because the voluntary dismissal undoes the only record act of acceleration — the initial foreclosure complaint. However, in using Pugh as the legal foundation for a deceleration argument, lenders may face evidentiary obstacles. Although the Pugh court held that a voluntary dismissal of an initial foreclosure action was “in effect” a decision by the lender not to accelerate at that time, other courts have required more affirmative acts and express statements of deceleration.

If something more than a mere dismissal is required to decelerate, the lenders are in trouble. It is not the regular practice of lenders to deliver independent notices of deceleration, to collect on individual installments or send monthly invoices after voluntary dismissal of an initial foreclosure action, or to send second notices of intent to accelerate. Further, lenders do not regularly allege deceleration or subsequent default in their second foreclosure complaints, as their foreclosure firms simply reuse their standard complaint forms. These practices may damage the lenders’ position because the allegation of a different default after the first voluntary dismissal was critical in both Singleton and Pugh. If lenders do not modify these practices, a discerning court to a second foreclosure action might hold that when a lender accelerated its note and mortgage in or before the first foreclosure complaint, did not take sufficient steps to decelerate, and did not allege a factually valid subsequent default, a second foreclosure is time-barred. This may be so even if a lender later amended its complaint to allege a timely default.

It remains to be seen whether Florida courts will continue to amplify the reach of Singleton or begin to demand evidence of deceleration from lenders. Lenders may change their practices and bolster their arguments under Singleton and Pugh by affirmatively alleging deceleration and secondary default within the limitations period or sending notice of deceleration. However, none of these practices, applied retroactively, may overcome the borrowers’ right to enforcement of the statute of limitations against lenders who have slept on their rights or failed to monitor their own foreclosure attorneys, loan documents, and limitations periods.


1 Fla. Stat. §§95.11(2)(b) and (c)(2013).

2 See Olympia Mortg. Corp. v. Pugh, 774 So. 2d 863 (Fla. 4th DCA 2000) (discussing the concept but failing to directly address deceleration); U.S. Bank Nat’l Ass’n v. Bartram, 2014 WL 1632138 (Fla. 4th DCA 2014) (certifying a deceleration question to the Florida Supreme Court as a matter of great public importance).

3 Fla. Stat. §§697.01, 697.02, and 702.01 (2013) (instruments deemed mortgages, nature of a mortgage, and foreclosure of mortgages).

4 See, e.g., Fed. Home Loan Mortg. Corp. v. Taylor, 318 So. 2d 203, 207 (Fla. 1st DCA 1975) (discussing established Florida jurisprudence on notes and mortgages as installment contracts).

5 Fla. Stat. §§95.11(2)(b) and (c) (2013).

6 Fla. Stat. §95.031(1) (2013); see also, e.g., Chrestensen v. Eurogest Inc., 906 So. 2d 343, 345 (Fla. 4th DCA 2005) (a cause of action accrues on occurrence of the last element); Smith v. F.D.I.C., 61 F. 3d 1552, 1561 (11th Cir. 1995) (on accrual of foreclosure claim).

7 See Central Home Trust Co. of Elizabeth v. Lippincott, 392 So. 2d 931, 933 (Fla. 5th DCA 1980).

8 Id. at 933 (reversing summary judgment based on statute of limitations when lender never took clear action to accelerate and merely charged off the loan) (Lippincott makes no reference to deceleration, voluntary or involuntary dismissal, or res judicata).

9 See, e.g., Smith, 61 F.3d at 1561 (acceleration provides an exception from the rule that a mortgage foreclosure statute of limitations runs from the maturity date of the final installment); Parker Plaza West Partners v. UNUM Pension and Ins. Co., 941 F. 2d 349, 356 (5th Cir. 1991) (“acceleration clauses ‘serve a valid business purpose’”).

10 Lippincott, 392 So. 2d at 933.

11 See, e.g., Konsulian v. Busey Bank, N.A., 61 So. 3d 1283, 1285 (Fla. 2d DCA 2011).

12 Id.; Pici v. First Union Nat’l Bank of Florida, 621 So. 2d 732, 733 (Fla. 2d DCA 1993) (“A demand for accelerated payments can consist of written or oral notice to the debtor, or the filing of a suit pleading acceleration.”); Locke v. State Farm Fire and Cas. Co., 509 So. 2d 1375, 1377 (Fla. 1st DCA 1987) (affirming denial of motion to dismiss for expiration of mortgage foreclosure limitations period when lender did not exercise its right to accelerate until filing its foreclosure complaint).

13 See Green v. Bursey, 733 So. 2d 1111, 1114-15 (Fla. 4th DCA 1999) (holding that when an installment contract contains an optional acceleration clause, the statute of limitations for recovering under the contract may commence running on payments not yet due if the holder exercises its right to accelerate the total debt because of a default).

14 Lippincott, 392 So. 2d at 933.

15 Compare Fla. Stat. §494.00794(1) (2013) (presuit cure of default on high-cost home loan shall reinstate the borrower and nullify any acceleration of any obligation under the security instrument or note arising from the default), and Fla. Stat. §95.051(1)(f) (2013) (statute of limitations is tolled by payment of any obligation founded on a written instrument), with N.J. Rev. Stat. §2A:50-57 (2013) (a debtor may at any time up to final judgment cure the default, decelerate and reinstate the mortgage by tendering the amount), and 11 U.S.C. §1322(c)(1) (a default may be cured until foreclosure sale); see also Bartram, 2014 WL 1632138 at *12 (certifying question whether acceleration in involuntarily dismissed foreclosure complaint triggered statute of limitations); Pugh, 774 So. 2d at 866 (discussing that by voluntarily dismissing the foreclosure suit alleging mortgage acceleration, a lender “in effect” decides not to accelerate); Pici, 621 So. 2d at 733 (mortgage acceleration and foreclosure was prevented when the borrower tendered payment before the lender’s notice of acceleration through foreclosure complaint, but after lender’s undisclosed decision to accelerate); Campbell v. Werner, 232 So. 2d 252, 256 (Fla. 3d DCA 1970) (holding foreclosure on an accelerated basis may be denied when a borrower tenders payment of defaulted items after default, but before notice of election to accelerate is given).

16 Bartram, 2014 WL 1632138 at *5 (“The bank contends that the [involuntary] dismissal of its foreclosure suit nullified its acceleration of future payments.”); Pugh, 774 So. 2d at 866 (“[B]y voluntarily dismissing the suit, [the lender] in effect decided not to accelerate.”).

17 Singleton, 882 So. 2d at 1007 (emphasis added).

18 Id. at 1007-08.

19 Id. at 1008.

20 Id. at 1007.

21 See, e.g., Dorta v. Wilmington Trust Nat’l Ass’n, 2014 WL 1152917, slip op. at *5 (M.D. Fla. 2014); Kaan v. Wells Fargo Bank, N.A., 2013 WL 5944074 at *2 (S.D. Fla. 2013); PNC Bank, N.A. v. Neal, 2013 WL 5779048 at *2 (Fla. 1st DCA 2013); and Star Funding Solutions, LLC v. Krondes, 101 So. 3d 403, 403 (Fla. 4th DCA 2012).

22 Dorta, 2014 WL 1152917 at *6-7.

23 Id. at n.3 (“[Involuntary] [d]ismissals without prejudice are not considered adjudications of the merits, and therefore there was no effective acceleration of the [n]ote and the [m]ortgage.”).

24 Id. at *6 (citing Singleton, 882 So. 2d at 1007-08) (emphasis added).

25 See Pugh, 774 So. 2d at 866 (citing Fla. R. Civ. P. 1.420(a)).

26 Id.

27 Id.

28 Id. at 867.

29 Id. at 866.

30 Kaan, 2013 WL 5944074 at *3.

31 Id. at *1.

32 Id. at *3.

33 Id. at *2.

34 Id. at *3.

35 See, e.g., U.S. Bank Natl. Assn. v. Gullotta, 120 Ohio St. 3d 399 (2008); Hamlin v. Peckler, 2005 WL 3500784 (Ky. 2005); Cadle Co. II, Inc. v. Fountain, 281 P. 3d 1158 (Nev. 2009); First Bank of Marietta v. Hogge, 161 F.3d 506 (8th Cir. 1998).

36 Gullotta, 899 N.E. 2d at 989.

37 Id. at 993.

38 Hamlin, 2005 WL 3500784 at *2.

39 Fountain, 281 P.3d slip op. at *1 (“Because an affirmative act is necessary to accelerate a mortgage, the same is needed to decelerate. Accordingly, a deceleration, when appropriate, must be clearly communicated by the lender/holder of the note to the obligor.”).

40 Id. at *1, n.1.

41 Hogge, 161 F. 3d at 510.

42 Id. at 509.

43 Id. at 510.

44 Keeler, 191 P. slip op. at *33 (reversing trial court’s holding that dismissed former action triggered statute of limitations barring second action).

45 Culver, 59 P. at 292.

46 Mitchell, 174 S.W.2d at 676-77 (Ark. 1943) (holding that the lender reinstated mortgages when it dismissed foreclosure action and agreed to waive its right to acceleration, and, thus, had the right to declare a subsequent acceleration after a later default).

47 Id.

48 See Allie v. Ionata, 503 So. 2d 1237, 1240 (Fla. 1987) (quoting Nardone v. Reynolds, 333 So. 2d 25, 36 (Fla. 1976)); Schacter v. Krzynowek, 958 So. 2d 1061, 1064 (Fla. 4th DCA 2007) (addressing the public policy in favor of a short statute of limitations which promotes alienability of real property).


Andrew J. Bernhard is an attorney and manager of Bernhard Law Firm PLLC, a litigation firm handling trials and appeals in business and financial disputes. He concentrates on complex fraud litigation, business and finance disputes, and consumer claims. Bernhard Law Firm PLLC represents corporations and individuals in connection with banking, contract, investment, and property matters. The author specially acknowledges Alan H. Rolnick and Andres Rivero.

[Revised: 09-02-2014]