Judge Robert J. Luck of the Third District Court of Appeal.
Judge Robert J. Luck of the Third District Court of Appeal. (J. Albert Diaz)

They already had what they wanted, yet two homeowners who felt misled during a mortgage refinance brought suit against three financial firms, prompting an appellate panel to suggest they shouldn’t “beat a dead horse.”

Plaintiffs John and Nancy Bennett’s truth-in-lending lawsuit withered before this question from a state appellate panel: Why allow a federal cause of action over a clerical error the lender corrected months before the couple filed suit?

The Bennetts received everything they asked other than attorney fees by October 2012, Judge Robert J. Luck wrote for the Third District Court of Appeal. “There was no need to slay the slain,” he added

The Bennetts sued lender LF Loans and its president, Jamal Wilson; Mortgage Electronic Registration System Inc.; and GTE Federal Credit Union, to which LF assigned the loan. The couple sought declaratory relief for alleged fraud and violation of the federal Truth in Lending Act, which requires lenders to disclose terms, costs and other loan details to consumers.

The Bennetts’ claim stemmed from refinancing an “underwater” mortgage—a debt that exceeds the home’s value. They secured a federally guaranteed loan from LF Loans through the Home Affordable Refinance Program, or HARP. But the borrowers said the companies involved in the transaction failed to disclose a key piece of information—private mortgage insurance tacked on as part of refinancing.

The disclosure attached to the loan application estimated a nearly $1,346 monthly payment, including $237.60 in escrow for private mortgage insurance, property insurance and taxes. Stewart Title Co. helped close the loan in June 2012 after the borrowers signed several documents, including a payment letter and an initial escrow account disclosure statement, according to court records. The estimated monthly payment at closing was about $1,238 without private mortgage insurance.

The debt later transferred to GTE Federal Credit Union, which issued the Bennett’s first bill.

That bill was lower than the estimate given at closing, so John Bennett contacted the financial institution for clarification. When GTE followed up, it presented yet a different payment amount—this time higher, including a monthly charge of nearly $101 for private mortgage insurance.

“Mr. Bennett asked GTE to send him a copy of the documents he signed agreeing to the higher payment. Within a week he received several documents, including a payment letter and initial escrow account disclosure statement, which the Bennetts contend were forgeries,” Judge Luck wrote. “Unlike the Bennetts’ copies of the closing documents, the documents sent to Mr. Bennett by GTE included a $100.92 charge for private mortgage insurance.”

The couple hired a lawyer who demanded GTE wipe out the insurance charge within 60 days, or face a lawsuit. Plus, they requested $200 they’d paid in attorney fees and another $300 soon due.

GTE responded that the title company likely made a clerical error, which it later sought to fix.

“I am uncertain as to why those parties chose to take action resulting in misrepresentation,” a company representative wrote to plaintiff’s counsel, according to court documents.

GTE then issued new bills and refunded nearly $303 for three months the Bennetts paid under protest.

But the Bennetts filed a lawsuit three months later that underwent two iterations over a four-year period as the couple pursued its forgery charge against LF Loans and its principal, a Truth in Lending Act claim against all defendants, and declaratory relief against GTE and MERS, which held title to the mortgage.

The financial companies asked Miami-Dade Circuit Judge Michael Hanzman for summary judgment on several grounds, including a claim they refunded the money, removed the charge and remedied the disclosure error within the 60-day window under federal law. The trial judge granted that request, and an appellate panel affirmed.

“The ancient Greek playwright Sophocles asked in one of his best known dramas, ‘Antigone,’ ‘What prowess is it to slay the slain anew?’ (Nowadays we would ask, ‘Why beat a dead horse?’),” Luck wrote in a unanimous decision with Third DCA Judges Vance E. Salter and Ivan F. Fernandez. “Congress must have had Sophocles in mind when it drafted the Truth in Lending Act.”

Among other provisions, that law protects creditors who act swiftly to fix errors by repaying borrowers within 60 days.

“The dispute between the Bennetts and the defendants — whether the Bennetts were wrongly charged for mortgage insurance — was resolved months before the initial complaint was filed, and years before summary judgment was entered,” Luck wrote.

Coral Gables attorney Rex Russo, of the Law Offices of Rex E. Russo, represented the Bennetts on appeal.

Scott Feder, of Scott Jay Feder P.A. in Coral Gables, represented the companies and Wilson.