Judge Martha Warner
Judge Martha Warner (Melanie Bell)

The appellate court in West Palm Beach gave notice to mortgage banks Wednesday that they can’t wait at their convenience to try to vacate adverse judgments.

The Fourth District Court of Appeal certified a conflict with the First and Third districts and told the Florida Supreme Court the issue was of “statewide importance.”

The case at hand involved BNY Mellon, which obtained an order to vacate a foreclosure judgment obtained by Condominium Association of La Mer Estates Inc.

The Hallandale Beach condominium association obtained a foreclosure judgment in 2009 against a unit owner who defaulted on the mortgage and the condo maintenance payments in 2008.

After the judgment but before the sale, BNY Mellon was assigned the mortgage. The association was the only bidder at the foreclosure auction and obtained certificate of title.

La Mer offered to convey title to the bank, but the bank didn’t respond.

La Mer then filed a complaint to quiet title, alleging the bank assignment clouded La Mer’s title.

La Mer served the bank notice of its complaint and obtained a default judgment. Concerned the bank wasn’t properly served, La Mer got the court to vacate that judgment and served BNY Mellon again.

The bank still didn’t respond. La Mer got a second default judgment, and a judgment quieting title was entered Feb. 10, 2011. It took the bank 1½ years to respond with a motion to vacate on grounds the judgment was void because La Mer failed to state a cause of action.

Broward Circuit Judge Dale Ross granted the order vacating La Mer’s judgment, and the condo association appealed.

Writing for the Fourth District, Judge Martha Warner conceded the court previously “adopted the principle that a default judgment based upon a complaint which fails to state a cause of action is void.”

She then reached back in time to a 1941 Florida Supreme Court case, Coleman v. Williams, that held a judgment entered on a complaint which failed to state a cause of action was “voidable but not void,” and that the trial court erred in vacating a judgment where the motion to set it aside was filed nine years later.

Warner went further back to a 1926 Supreme Court case, Malone v. Meres, to explain the difference. Judgments where the court has jurisdiction are not void but voidable. And subject matter jurisdiction isn’t confined to cases where the facts “constitute a good cause of action” but include every issue within the scope of a court’s authority.

To attack a voidable judgment and render it void, the challenger’s options are limited to a timely appeal or a timely motion to set it aside, she noted. BNY Mellon had to attack the default judgment within a year.

“We conclude that our cases which hold that such a judgment is void depart from Supreme Court precedent, and we should recede from them,” Warner said.

The full Fourth District considered this case. It unanimously reversed Ross’s order to vacate and sent the lawsuit back with instructions to reinstate La Mer’s judgment.

In considering the broader implications, the court said a ruling for BNY Mellon could cloud title for years, rendering it unmarketable.

“What title insurance company would hazard insuring a title containing a default judgment in its chain if that judgment could be vacated at any time?” Warner asked.

La Mer was represented by Michael Heidt of the Law Office of Gable & Heidt in Hollywood. He said certification of a conflict allows BNY Mellon to appeal to the state Supreme Court, but the bank also can ask the Fourth District to rehear the case.

Heidt argued the case before a three-judge panel last Nov. 20.

“Because they were receding from previous opinion, the three-judge panel on their own asked the entire bench to weigh in,” Heidt said. “If the opinion stays in effect, it tells lenders they can’t just let lawsuits sit and not do anything about it.”

BNY Mellon was represented by Tricia Duthiers of Liebler, Gonzalez & Portuondo in Miami, who had no comment.