A new matter has come to our firm which is strikingly similar to another recent case we had. The borrowers are alleging fraud based on “new evidence” discovered after an expert reviewed the loan documents. In this case, an eight-year-old assignment from MERS was the allegedly fraudulent conveyance despite the fact judgment was entered three years earlier. They are attempting to vacate judgment and sanction all parties supported by an attorney expert affidavit(s).
In the other case, a separate suit was filed by the borrowers for fraud based on allegedly forged loan documents (note, mortgage, etc.) after an expert review. This review was performed about four years after entry of judgment and they had lost their appeal. One would think the borrowers would have used that defense the first time around if they did not sign the loan documents. Our firm was successful in procuring dismissal of the latter claim, as well as sanctions against the borrowers by virtue of a 57.105 motion pursuant to the Florida Statutes.
Both of these cases seem to be part of an emerging trend as the cases and attorneys are unrelated but the logic is unique. We have learned that other law firms have seen the same types of tactics recently with the use of post-judgment expert review on cases already adjudicated.
Any legal practice area with sufficient volume goes through litigation trends. In foreclosure, there have been trends with regard to standing and conditions precedent, amongst other pleading rules and requirements. As the defense bar attempts to take various, new positions in foreclosure cases, precedent gets developed once trial court cases move through the appellate process.
This new trend is the attempted use of experts to overcome the doctrines of res judicata and estoppel by judgment. The process appears to be as follows:
- The plaintiff files a complaint to enforce a note and foreclose a mortgage
- The borrower either does or does not defend the claim, but in any event, does not endeavor to use expert testimony to claim that the note is inadmissible due to fraud
- The plaintiff proceeds to judgment in its favor
- The borrower either moves to vacate the judgment or files an independent action for damages, premised on expert testimony that the note is in some way fraudulent
These actions by borrowers may be barred by either res judicata or estoppel by judgment. An action is barred by the doctrine of res judicata where there exists:
- Identity in the thing sued for
- Identity of the cause of action
- Identity of persons and parties to the action
- Identity of the quality or capacity for or against whom the claim is made. Rhyne v. Miami-Dade Water & Sewer Auth., 402 So. 2d 54, 5 (Fla. 3d DCA 1981).
An action is barred by estoppel by judgment under the following circumstances:
Where the causes of action are different, the doctrine of estoppel by judgment comes into play, in which case the parties are precluded from relitigating matters actually litigated and determined, but only those matters, and not matters which were in fact not litigated in the former action, even though such matters might properly have been determined therein. Thus, before a litigant is barred under the doctrine of estoppel by judgment, it must appear that the points or questions involved in the subsequent action were determined in the prior action.
Green v. State, 412 So. 2d 413, 414 (Fla. 3d DCA 1982). Courts enforce these bars to litigation because there is an interest to there being an end to litigation and an ultimate point of determination. In other words, it is a disservice to the law to allow the finality of judgments to be diminished.
Borrowers attempting to use expert testimony to revive cases that have reached their final conclusion may be blocked by the doctrines of res judicata or estoppel by judgment. What’s more, the conduct of this attempted expert testimony may be sanctionable, pursuant to section 57.105, Florida Statutes. An aggressive approach to terminating this litigation may ebb the trend of borrowers’ counsel employing these particular experts in cases that have been concluded.