Miami- Bruce Jacobs, with Jacobs Keeley, PLLC
Miami- Bruce Jacobs, with Jacobs Keeley, PLLC (J. Albert Diaz)

Things looked grim for HSBC Bank USA N.A. last year when it faced involuntary dismissal of its case after a bench trial and sanctions for prosecuting a foreclosure suit with “unclean hands.”

Back then, the trial judge sided with borrowers accusing the bank of building its case on a forged mortgage assignment and granted their request to force the financial institution to show why it shouldn’t be punished for committing a fraud on the court.

But HSBC seems off to a strong start on appeal—at least in its challenge of one aspect of the lower court’s order—having survived a motion to dismiss its case as premature before a state appellate panel.

The foreclosure pitted HSBC, as trustee for FR Fremont Home Loan Trust mortgage-backed certificates, against homeowners Joseph and Margaret Buset.

The Busets’ lawyers, Bruce Jacobs and Court Keeley of Jacobs Keeley in Miami, sought to block a review in the Third District Court of Appeal. They claimed the Third District Court of Appeal lacked jurisdiction because the lower court was still weighing evidence and had reserved jurisdiction to impose sanctions and award attorney fees. Jacobs said a dismissal would allow “the Third DCA (to) make a ruling based on everything we know on the issue, as opposed to having successive appeals over and over.”

But HSBC’s challenge covered only one aspect of the ruling—the involuntary dismissal of its mortgage foreclosure—and that portion contained language entering judgment and therefore making it ripe for appeal, according to the judicial panel.

“The trustee does not seek appellate review of either the order’s reservation of jurisdiction to award prevailing party attorney fees or the order’s reservation of jurisdiction to impose sanctions,” Judge Barbara Lagoa wrote for the Third District Court of Appeal.

The ruling opens the door for the bank to continue challenging dismissal of its foreclosure suit.

“It is well established that a trial court’s reservation of jurisdiction to award fees, costs or sanctions does not affect the finality of a judgment,” Lagoa wrote in a unanimous decision with Judges Kevin Emas and Thomas Logue.

Kimberly Mello and Jonathan Tannen of Greenberg Traurig represent HSBC.

The litigation grabbed headlines in May after Miami-Dade Circuit Judge Beatrice Butchko issued a ruling finding financial companies handling and trading the Busets’ debt relied on a fraudulent assignment of mortgage.

“This court finds the AOM created in 2012 does not document a transaction that occurred in 2005 as plaintiff suggests,” Butchko ruled. “The transaction described in the AOM never legally occurred. There was never a transaction between MERS and/or Fremont Investment and Loan that sold defendant’s loan directly to the trust. Not in 2012, not in 2005, not ever.”

But the Third DCA found the judge’s involuntary dismissal of the complaint after a bench trial did not adhere to best practices, and that Butchko should have instead entered a final judgment on the merits, instead of tossing the litigation.